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- Short squeezes lead to sudden stock price surges but are notoriously hard to predict.
- Software company Support.com surged on a short squeeze last week and may have more room to run.
- Data provider Fintel says these five stocks are most likely to experience a short squeeze this week.
- See more stories on Insiders business page.
And the party isnt over yet. Shares of the technical-support software company-turned-meme stock popped 38% in early trading Monday, while financial data provider Fintel said Sunday that theres no stock more likely to undergo a short squeeze this week than Support.com.
Every week Fintel names the five stocks that are most likely to experience a short squeeze based on metrics it monitors. The list attempts to help retail investors find the next hot stock, like Support.com or GameStop (GME), that can skyrocket in value â€” though shares of these meme stocks can plummet back to Earth just as quickly, dearly costing those who buy in too late.
Fintel identified Support.com as a potential meme stock on Monday of last week, while last Tuesday a seperate Insider article noted that Support.com looked ready to pop. Shares have tripled in value since then.
GameStop shares also exploded in late January as small-time investors conspired to push the heavily shorted stock to the moon. The action caused a short squeeze, as hedge funds that bet the beaten-down video-game retailer would fail had to close their bearish positions and buy shares, perpetuating the cycle further.
Investors have pored over internet message boards like Reddits WallStreetBets in search of the next meme stock ever since. Doing so is difficult because it can be tough to tell which conversations are real and which are being manipulated by bots or spammers.
Is it a true and honest conversation around something, or are there bad actors who are trying to influence it in a particular way? Travis Rehl, founder of meme-stock analysis site HypeEquity, said in an interview with Insider.
Michael Pachter, a Wedbush Securities analyst whos covered GameStop since 2002, explained why finding the next short squeeze candidate can feel like an impossible challenge.
If everyone agrees with you, theres not much money to be made, Pachter said in an interview with Insider. ... If its crowded, youre not on to a secret.
Below are Fintels top five picks for near-term short-squeeze candidates for the week of August 30, ranked by the firms Short Squeeze Score calculation, for which 100 reflects maximum potential for a squeeze and is based on metrics such as borrowing fees and the percentage of short interest in a stock, as well as inputs such as trading volume. Also included are each companys ticker and analysis from Fintel.
2. Vinco Ventures
Squeeze score: 95.92
Fintel analysis: BBIG is second on this weeks list, with a short interest % float of 27.2% and a borrow fee rate of 62.02%. The share price of BBIG jumped 80.9% on Friday as meme stock traders piled in. Like SPRT, BBIG is also on the REG SHO threshold list, suggesting potential naked shorting activity. Subtracting short shares from the float shows that there are just 31.24M non-shorted shares in the market.
3. Lightning eMotors
Squeeze score: 95.29
Fintel analysis: Lightning eMotors is number three on the list this week, with a short float of 34.6% and a borrow fee rate of 87.10%. ZEV had a big day last Tuesday as the share price gapped from the prior days closing price of 6.41 to the days high of 12.10 before closing at 11.60, an increase of 80.1% for the day. Since then, both price and volume have fallen back, but the company still remains high on our list of candidates. Total float minus short interest for Lightning eMotors is 11.57.
4. Bit Mining
Squeeze score: 95.06
Fintel analysis: Bit Mining, the Shenzhen-based bitcoin mining operation, is number four on the list, with a borrow fee rate of 146% and a short float of 17.9%. The borrow fee rate of 146% is the second-highest rate on our list. BTCM has had a steady increase in volume and share price for the last 30 days, with the price climbing from 4.46 to its close of 8.19 this last Friday, an increase of 83% for the month. Subtracting short interest from float leaves just 22.08M shares.