The Next GameStop? 25 Stocks With High Short Interest
Wherever you find heavily shorted stocks, you'll probably find a trading frenzy. But beware: The music could stop at any moment.
Meme stocks are surging once again, with social media platforms such as Reddit fueling interest in a new crop of thinly traded names with high short interest.
Although longtime day-trader darlings like GameStop (GME, $209.20), Bed Bath & Beyond (BBBY, $28.44) and iRobot (IRBT, $82.83) have by no means disappeared from message boards, StockTwits and Twitter, the retail raiding hordes have found more fashionable names to fillet.
Vinco Ventures (BBIG, $7.06) and Support.com (SPRT, $36.39) are just two of the latest meme stocks coming under a coordinated short-squeeze attack. Shares in Vinco, a digital media mergers and acquisitions company, nearly doubled over the five trading sessions ended Aug. 30. Tech-support firm Support.com's stock more than tripled during that span, and has more than quadrupled in the past month.
As with most meme stocks, what these names have in common is exceedingly high short interest – or the percentage of shares outstanding sold short. And that's exactly what draws the attention of day traders looking to profit off the pain of short sellers.
For a quick primer: hedge funds and other market participants can bet against a stock by "shorting" it. But those bears sometimes get it wrong, and when they do, it can trigger an effect called a "short squeeze."
You can learn more about how short squeezes work here, but in brief, it's a phenomenon that occurs when buying pressure in a stock forces shorts to unwind their negative bets – which they can do only by purchasing the stock – fueling a virtuous cycle that sends shares aggressively higher.
In the case of Vinco, more than 19% of its shares outstanding were sold short heading into the week, per S&P Global Market Intelligence. Support.com's short interest stood at 25.5%.
Since any stock with 10% or more of its shares outstanding sold short is considered to have high short interest, BBIG and SPRT were obvious meme-stock candidates.
The new reality is that ever since the bros of r/WallStreetBets (WSB) began a campaign to crush hedge funds shorting GameStop by setting off a short squeeze, every stock with high short interest has become chum.
To get a sense of where the next shark bait might come from, we've put together a list of the 25 stocks with the highest short interest in the Russell 3000 Index, according to the latest data available from S&P Global Market Intelligence.
Be forewarned that this list is for informational purposes only. Going long on a stock with high short interest thinking you're going to get rich off panic-buying by short sellers is an exceedingly dangerous idea. Heck, it's at least as risky as shorting stocks with high short interest in the first place.
When it comes to playing around with high short interest stocks, unless you are uncommonly lucky, let's just say the risks greatly outweigh the rewards.