The meme stock trading frenzy has suddenly sprung back to life, with shares in GameStop (GME) and AMC Entertainment Holdings (AMC) blasting higher thanks to … well, let's call it speculative enthusiasm on social media.
GameStop rose by nearly three-quarters in a single session after one of the biggest boosters of the first meme-stock frenzy returned to the internet trenches following a multi-year absence. Apparently, a cryptic post on X by Keith Gill, aka "Roaring Kitty," was all it took to once again set off squeezes in some heavily shorted names.
Meme stocks tend to prompt consternation and confusion among normie market participants, but then that's just part of the fun. While it's technically true that meme stocks offer the remote possibility of earning penny-stock-like returns, they mostly seem to function as a source of nihilistic belly laughs for a select community of day traders.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Either way, it appears the retail raiding hordes are back. They are piling into stocks with high short interest – in other words, companies where many shares are being used to bet against the stock – with the intention of setting off a short squeeze.
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."
Stocks with high short interest
You can learn more about how short squeezes work in our explainer, 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.
To get a sense of where the next short squeeze candidate might come from, we've put together a table of the 15 stocks with the highest short interest by shares outstanding in the broad Russell 3000 Index, according to the latest data available from YCharts.
But first, a caveat: 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. 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.
| Company | Ticker | % of shares outstanding sold short |
|---|---|---|
| Beyond Meat | BYND | 39.1 |
| Biomea Fusion | BMEA | 38.9 |
| Arbor Realty Trust | ABR | 38.5 |
| Cutera | CUTR | 37.6 |
| Medical Properties Trust | MPW | 37.0 |
| Kohl's | KSS | 32.8 |
| Sunnova Energy | NOVA | 32.3 |
| Cassava Sciences | SAVA | 32.1 |
| Novavax | NVAX | 32.0 |
| Altimmune | ALT | 31.5 |
| EVgo | EVGO | 30.2 |
| B. Riley Financial | RILY | 29.9 |
| Trupanion | TRUP | 29.5 |
| iRobot | IRBT | 29.3 |
| Medifast | MED | 28.5 |
Related content
-
Ask the Editor — Tax Questions on Inherited IRAsAsk the Editor In this week's Ask the Editor Q&A, we answer tax questions from readers on the rules on inheriting IRAs.
-
I Asked Experts When It's Worth Splurging on Beauty and Skincare — and When You Can SaveSmart Shopping Experts agree that while you don't have to spend three figures on your products, some higher-priced items have value.
-
Recent Market Volatility Offers Valuable Lessons for InvestorsStocks will always rise and fall, but strategic investors can benefit through dollar-cost averaging, rebalancing in down markets and taking the long view.
-
Retiring Early? This Strategy Cuts Your Income Tax to ZeroWhen retiring early, married couples can use this little-known (and legitimate) strategy to take a six-figure income every year — tax-free.
-
Ditch the Golf Shoes: Your Retirement Needs a Side GigA side gig in retirement can help combat boredom, loneliness and the threat of inflation eroding your savings. And the earlier you start planning, the better.
-
The Best Aerospace and Defense ETFs to BuyThe best aerospace and defense ETFs can help investors capitalize on higher government defense spending or hedge against the potential of a large-scale conflict.
-
Roth IRA Conversions in the Summer? Why Now May Be the Sweet SpotConverting now would enable you to spread a possible tax hit over more than one payment while reducing future taxes.
-
A Financial Expert's Three Steps to Becoming Debt-Free (Even in This Economy)If debt has you spiraling, now is the time to take a few common-sense steps to help knock it down and get it under control.
-
I'm an Insurance Expert: This Is How Your Insurance Protects You While You're on VacationHere are three key things to consider about your insurance (auto, property and health) when traveling within the U.S., including coverage for rental cars, personal belongings and medical emergencies.
-
Stock Market Today: It's 'Most Sectors Go' Ahead of Independence DayThe resilience trade continues to work, even for sectors and stocks with specific uncertainties.
