In this article, we discuss 15 best short squeeze stocks to buy now. If you want to see more stocks like these, check out 5 Best Short Squeeze Stocks to Buy Now.
In 2021, retail trading activity resulted in an unparalleled short squeeze that led major capital market players to lose billions of dollars. In the beginning of 2020, GameStop Corp. (NYSE:GME) stock was worth about $3 per unit. However, the short interest climbed to 140% of GameStop Corp. (NYSE:GME)’s total float. This means more shares were shorted than existed.
That caught the interest of retail traders, who believed GameStop had exceptional short squeeze potential. Investors on Reddit communities, such as r/wallstreetbets, seriously began to step up when Chewy co-founder Ryan Cohen purchased roughly 10% of GameStop Corp. (NYSE:GME)’s total stock. This is when GameStop shares began massively climbing. Even after a year of the infamous short squeeze, GameStop remains highly popular among hardcore fans and trading volumes are still huge.
Once known as one of the best hedge funds on Wall Street, Melvin Capital, was a prominent short seller in the GameStop short squeeze. The hedge fund, which started 2021 with more than $12 billion in capital, lost 53% in January. By May 2022, Melvin Capital was still struggling with heavy losses from last year and the fund decided to liquidate its assets and return capital to all investors.
Investors stand to shore up massive share price gains during short squeezes. The GameStop Corp. (NYSE:GME) short squeeze made many investors millionaires. Some of the best short squeeze stocks to buy now include Beyond Meat, Inc. (NASDAQ:BYND), Bed Bath & Beyond Inc. (NASDAQ:BBBY), and AMC Entertainment Holdings, Inc. (NYSE:AMC).
Our Methodology
We scoured the internet platform Reddit, particularly subreddits like r/wallstreetbets and r/shortsqueeze, and selected firms most likely to be involved in a short squeeze soon based on the sentiment of retail investors. Data from the 895 funds tracked by Insider Monkey was used to assess the hedge fund sentiment around the securities as of Q2 2022.
FingerMotion, Inc. (NASDAQ:FNGR) is a New York-based mobile data specialist company, providing mobile payment and recharge platform solutions in China. Its products and services include data plans, subscription plans, mobile phones, and loyalty points redemption, among others. The company recently made agreements with China Unicom and China Mobile. Patents also insure that competitive pressures are limited.
Like Beyond Meat, Inc. (NASDAQ:BYND), Bed Bath & Beyond Inc. (NASDAQ:BBBY), and AMC Entertainment Holdings, Inc. (NYSE:AMC), FingerMotion, Inc. (NASDAQ:FNGR) is one of the best short squeeze stocks to buy now.
Camber Energy, Inc. (NYSE:CEI) is an independent oil and natural gas company that explores for and sells crude oil, natural gas, and natural gas liquids in Kansas, Missouri, Louisiana, and Texas. Lately, Redditors are enthused about initiating a short squeeze on Camber Energy, Inc. (NYSE:CEI), which has gathered a short interest of 6.53% as of September 14. Year-to-date, as of October 5, the stock has declined about 76%.
According to the second quarter database of Insider Monkey, 2 hedge funds held stakes worth $295,000 in Camber Energy, Inc. (NYSE:CEI), compared to 5 funds in the prior quarter worth $496,000.
ContextLogic Inc. (NASDAQ:WISH) was incorporated in 2010 and is headquartered in San Francisco, California. It is a mobile e-commerce company with operations in Europe, North America, South America, and internationally. ContextLogic Inc. (NASDAQ:WISH) stock has plummeted about 75% year-to-date as of October 5 and it is on the radar of short sellers as well. Redditors have shown a lot of interest in ContextLogic Inc. (NASDAQ:WISH) lately, making it one of the best short squeeze stocks to buy now.
On August 10, Credit Suisse analyst Stephen Ju lowered the price target on ContextLogic Inc. (NASDAQ:WISH) to $7.20 from $7.60 and kept an Outperform rating on the shares after the company posted Q2 revenue that failed to meet the consensus forecast. However, the "more important takeaway" from the Q2 results was that ContextLogic Inc. (NASDAQ:WISH) continues to execute on its turnaround story, said the analyst, who expects that Q3 free cash flow "will mark the trough" and improve in 2023.
According to Insider Monkey’s data, 13 hedge funds were bullish on ContextLogic Inc. (NASDAQ:WISH) at the end of June 2022, down from 19 funds in the prior quarter. Maple Rock Capital is the leading position holder in the company, with 13.5 million shares worth $21.6 million.
Next on our list of the best short squeeze stocks to buy is Paramount Global (NASDAQ:PARA), a media and entertainment company that operates through TV Media, Direct-to-Consumer, and Filmed Entertainment segments. On September 21, the company declared a quarterly dividend of $0.24 per share, in line with previous. The dividend is payable on January 3, 2023 to shareholders of record on December 15. The dividend yield on October 5 came in at approximately 5%.
Wells Fargo analyst Steven Cahall on October 4 downgraded Paramount Global (NASDAQ:PARA) to Equal Weight from Overweight with a price target of $19, down from $40. The analyst, who was previously bullish on Paramount Global (NASDAQ:PARA)’s content and streaming execution, is "increasingly worried" about the linear ecosystem across media.
According to Insider Monkey’s second quarter data, 42 hedge funds were long Paramount Global (NASDAQ:PARA), compared to 40 funds in the last quarter. Warren Buffett’s Berkshire Hathaway is the biggest stakeholder of the company, with 78.4 million shares worth about $2 billion.
Dynavax Technologies Corporation (NASDAQ:DVAX) is headquartered in Emeryville, California, operating as a biopharmaceutical company focused on developing and commercializing novel vaccines in the United States. On August 4, Dynavax Technologies Corporation (NASDAQ:DVAX) boosted the 2022 revenue guidance of its primary product, the vaccine adjuvant CpG 1018. Dynavax Technologies Corporation (NASDAQ:DVAX) is one of the best short squeeze stocks to buy now.
On September 27, JMP Securities analyst Roy Buchanan assumed coverage of Dynavax Technologies Corporation (NASDAQ:DVAX) with an Outperform rating and a $22 price target. Dynavax Technologies Corporation (NASDAQ:DVAX)’s adjuvant technology is validated by a "best-in-class authorized vaccine and is the cornerstone in the company's emerging pipeline," the analyst told investors in a research note. His valuation for the stock hinges upon the "less-risky" future cash flows for Dynavax Technologies Corporation (NASDAQ:DVAX) from its approved, market-leading, Hepatitis B preventative vaccine.
According to Insider Monkey’s data, 18 hedge funds were bullish on Dynavax Technologies Corporation (NASDAQ:DVAX) at the end of Q2 2022, compared to 22 funds in the earlier quarter. Ken Fisher’s Fisher Asset Management is a prominent position holder in the company, with 4.3 million shares worth $54 million.
10. American Virtual Cloud Technologies, Inc. (NASDAQ:AVCT)
Number of Hedge Fund Holders: 5
Short Interest as of September 14: 11.54%
American Virtual Cloud Technologies, Inc. (NASDAQ:AVCT) is a Georgia-based pure-play cloud communications and collaboration company, offering a real-time communications platform to enterprises worldwide. American Virtual Cloud Technologies, Inc. (NASDAQ:AVCT) also has strategic partnerships with AT&T, IBM, and Etisalat to sell various solutions. The shorted float as of September 14 exceeded 11.5%, and Redditors are lately bullish on American Virtual Cloud Technologies, Inc. (NASDAQ:AVCT), making it one of the best short squeeze stocks to buy now.
On September 30, American Virtual Cloud Technologies, Inc. (NASDAQ:AVCT) announced that it intends to effect a 1-for-15 reverse stock split of its issued and outstanding shares of common stock. The company's common stock began trading on a split-adjusted basis when the market opened on October 3, 2022.
Among the hedge funds tracked by Insider Monkey, Paul Marshall and Ian Wace's Marshall Wace LLP is the leading position holder in American Virtual Cloud Technologies, Inc. (NASDAQ:AVCT), with 398,797 shares worth $100,000. Overall, 5 hedge funds were long American Virtual Cloud Technologies, Inc. (NASDAQ:AVCT) at the end of June 2022, compared to 4 funds in the last quarter.
GameStop Corp. (NYSE:GME) is a Texas-based retailer of games and entertainment products. On September 7, the company reported a Q2 non-GAAP loss per share of $0.35, beating market consensus by $0.06. The revenue of $1.14 billion declined 3.4% year-over-year, missing Wall Street estimates by $130 million. GameStop Corp. (NYSE:GME) short squeeze made headlines in 2021, and retail investors are still backing the stock despite underlying fundamentals not matching valuation. It is one of the best short squeeze stocks to buy now.
On July 22, Wedbush analyst Michael Pachter lowered the price target on GameStop Corp. (NYSE:GME) to $7.50 from $30 and reiterated an Underperform rating on the shares. GameStop Corp. (NYSE:GME) shares remain at levels that appear disconnected from the fundamentals of the business, and the company's turnaround plan has so far proved inadequate, the analyst told investors in a research note.
Among the hedge funds tracked by Insider Monkey, 17 funds were long GameStop Corp. (NYSE:GME) at the end of the second quarter of 2022, compared to 18 funds in the last quarter. Mason Capital Management is a notable position holder in the company, with 518,445 shares worth over $19 million.
Here is what Bireme Capital specifically said about GameStop Corp. (NYSE:GME) in its Q2 2022 investor letter:
“Amazingly, GameStop Corp. (NYSE:GME) is one of our only short positions to not fall in 2022. The stock trades at an $11.5b market cap, exceeding its pre-pandemic peak by billions of dollars. This is despite the fact that revenue is down 30% from the peak, gross margins are down 1500 bps, and the company has generated a negative free cash outflow of $700m in the last four quarters (we had to double check that number because it is so high).
Wall Street has consistently revised downward their estimates of Gamestop’s profitability, making its stock price stability in 2022 even more perplexing. Analysts currently estimate an EBITDA loss of around $400m, markedly worse than their estimates as of 2/3/22 of a loss of $60m. Their recently launched NFT marketplace will do nothing to fix their core business and comes about a year too late to be relevant in the NFT space. Instead, we see this as another example of a meme stock company hoping it can ape its way into a new business model, utilizing the popularity of the stock to drive new lines of business. We are not optimistic, and think the $11.5b market cap drastically overestimates the capability of Gamestop to pivot into something more profitable. We find it unlikely that Gamestop books a GAAP profit ever again.”
AMC Entertainment Holdings, Inc. (NYSE:AMC) owns and operates theaters in the United States and Europe. AMC Entertainment Holdings, Inc. (NYSE:AMC), along with GameStop, was aggressively shorted by hedge funds in 2021. Redditors are still confident in AMC Entertainment Holdings, Inc. (NYSE:AMC) and willing to initiate a short squeeze.
On August 23, Wedbush analyst Michael Pachter lowered the price target on AMC Entertainment Holdings, Inc. (NYSE:AMC) to $2 from $4 and maintained an Underperform rating on the shares. The analyst noted that while theatrical exhibition is on its way to normalization, the volume of content has not yet returned to pre-pandemic levels, and there have been massive production delays over the last year. On August 22, AMC Preferred Equity began trading, and the analyst has updated his model for the increased share count, thus slashing his price target to $2.
According to Insider Monkey’s data, 18 hedge funds were bullish on AMC Entertainment Holdings, Inc. (NYSE:AMC) at the end of Q2 2022, compared to 16 funds in the last quarter. Israel Englander’s Millennium Management is the largest position holder in the company, with 2.8 million shares valued at $38.2 million.
Blue Apron Holdings, Inc. (NYSE:APRN) is a New York-based company that operates a direct-to-consumer platform, delivering original recipes with fresh and seasonal ingredients. On October 3, Blue Apron Holdings, Inc. (NYSE:APRN) stock plummeted as much as 46.5% after the firm guided Q3 revenue well below Street consensus and going concern risks. The short interest as of September 14 stood at more than 28%. It is one of the best short squeeze stocks to buy now.
Lake Street analyst Ryan Meyers initiated coverage of Blue Apron Holdings, Inc. (NYSE:APRN) on August 10 with a Buy rating and a $9 price target. He believes the changes Blue Apron Holdings, Inc. (NYSE:APRN) has made since CEO Linda Findley's arrival in 2019 have improved its competitive position and allowed sustained growth.
Insider Monkey's Q2 2022 database suggests that 11 hedge funds were bullish on Blue Apron Holdings, Inc. (NYSE:APRN), compared to 14 funds in the last quarter. Charles Davidson's Wexford Capital is the largest shareholder of the company, with 612,092 shares worth $2.2 million.
Revlon, Inc. (NYSE:REV) is a New York-based company that manufactures, markets, and sells beauty and personal care products worldwide. In August, Revlon, Inc. (NYSE:REV) started to implement a comprehensive financial restructuring of its legacy capital structure to improve its long-term outlook after filing for Chapter 11 bankruptcy in mid-June. Revlon, Inc. (NYSE:REV) is one of the best short squeeze stocks to buy now.
According to Insider Monkey’s data, 14 hedge funds were long Revlon, Inc. (NYSE:REV) at the end of the second quarter of 2022, compared to 36 funds in the prior quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP is a significant shareholder of the company, with 301,758 shares worth $1.6 million.
In addition to Beyond Meat, Inc. (NASDAQ:BYND), Bed Bath & Beyond Inc. (NASDAQ:BBBY), and AMC Entertainment Holdings, Inc. (NYSE:AMC), retail investors are piling into Revlon, Inc. (NYSE:REV) as short interest increases.
Here is what Mittleman Brothers said about Revlon, Inc. (NYSE:REV) in its Q2 2022 investor letter:
“Lastly, MIM has already communicated regarding the Revlon, Inc. (NYSE:REV) bankruptcy filing on June 15th, see this link if you missed it, as MIM’s opinion here is unchanged: Revlon Bankruptcy
Revlon has since traded up from the pre-bankruptcy filing low of $1.08 on 13 June to above $9.00 on a couple of occasions, on 22 June and again on 1 August, and during those two trading sessions, MIM sold a good portion of its position at just over $9.00/share, given Chris’ reduced estimate of fair value is $10 (down from the mid-20s). If the bankruptcy process results in an auction of the assets the realization could be far in excess of $10 per share by simply applying the range of current market multiples. But, bankruptcy introduces significant costs, uncertainties, and risks that could confound fairness, so reducing the weighting into these periodic price spikes makes sense.
MIM continues to think there are plenty of buyers for these assets who could easily pay the 2x sales and 14x EBITDA needed (by Chris’ math) for the equity to recover about $10 per share in value. 15x EBITDA would be nearly $16 per share. 16x would be $22. And there are some new unexpected potential buyers, too…” (Click here to read more)
