Stocks with Higher Short Interest Institutions Are Betting Against
This year will forever be remembered as one of the best years ever for stocks with higher short interest. We will never forget the historical rise of heavily bet against stocks like GameStop (NYSE: GME) and AMC Entertainment (NYSE: AMC).
As institutions were betting these stocks would get crushed after the pandemic, retail traders gathered on Reddit to stoke a short-fueled rally. As a result, GameStop went from below $15 a share to over $400, rallying +2,500%.
So far, these past few months have not been as kind to the infamous “meme stocks.” In fact, the Meme ETF, designed to track these investments, is down 12% since its creation earlier this month.
Nonetheless, there’s a new batch of stocks with higher short interest that institutions are looking to take down next. Here they are:
Stocks with Higher Short Interest – 2022 Edition
This year, traders are placing big bets on certain stocks falling. Even more, the industries they are betting against are some of the biggest trends in the market right now.
Short sellers make money when the value of the asset declines. With this in mind, the higher the short interest, the more is being bet against a stock. At the same time, if share prices rise, shorts can either cover their position or hope it goes lower.
If they decide to cover their short position, it can lead to explosive stock rallies, such as the case with GameStop. That said, here are the stocks with higher short interest right now.
No. 5 Beyond Meat (Nasdaq: BYND)
- Market Cap: $1.62B
- Industry: Plant-Based Food
- Short Interest: 41%
Everyone’s favorite fake meat stock is trending again. But this time, for all the wrong reasons. Down about 60% this year, short-sellers are making out with BYND stock. Beyond Meat’s value skyrocketed after going public in May 2019, hitting a market cap of over $10 billion.
Since hitting an all-time high price of $221, BYND is giving back much of its gains. Now sitting at a $1.62 billion market cap, Beyond Meat’s value is down more than 80%.
The company sells plant-based products such as burgers, sausage and meatballs. And despite an upbeat outlook for the industry, investors are not buying into the hype making it on the list of stocks with higher short interest.
No. 4 Blink Charging (Nasdaq: BLNK)
- Market Cap: $653M
- Industry: EV Charging
- Short Interest: 29%
Another short target, Blink Charging, had an incredible run leading up to 2021 as President Biden promised to prioritize electric vehicles. In particular, the administration is focusing on building an EV charging network to promote wider adoption of EV’s.
After all, the stock’s valuation spiked to unheard-of levels at the beginning of the year. But a series of downgrades and competition flooding the market is cooling its value off. At the end of 2021, blink’s Price to Sales (P/S) was around 54. Since descending, its P/S is less than a half of what it was, currently around 22.
Nonetheless, investors are betting BLNK will fall further with shortages hitting the EV industry hard, making it onto my list of stocks with higher short interest.
No. 3 Lemonade (NYSE: LMND)
- Market Cap: $1.1B
- Industry: Insurance
- Short Interest: 30%
Lemonade came to market promising to reinvent the insurance industry. And in some ways, it has the potential to do that. But with LMND stock down over 58% this year, investors are questioning the company’s direction.
With this in mind, Lemonade offers AI-powered insurance products. At first, investors saw the technology as game-changing, running the stock to all-time high prices of $188 per share.
However, poor earnings results led investors to look elsewhere, with prices fading all year. While LMND stock is hitting all-time lows, short interest remains high. The company is now releasing Lemonade Car with big plans to change automotive insurance.
The company has already attracted over 1.3 million customers. And if Lemonade Car turns out to be a hit, short-sellers may be forced to cover sooner rather than later.
No. 2 Tattooed Chef (Nasdaq: TTCF)
- Market Cap: $533B
- Industry: Plant-Based Food
- Short Interest: 33%
Tattooed Chef had high praise for its innovative plant-based products by coming to the market via SPAC. The company offers several plant-based foods like cauliflower rice and zucchini noodles. Not only that, but they also provide ready-to-eat solutions and frozen items.
Although the company is still expanding its position, supply chain issues affect its ability to boost sales. Despite this, TTCF’s products are now in over 13,000 stores. Still, the company is lowering guidance, noting the ongoing issues as the reason for lower expectations.
The plant-based market is expected to grow 8.7% annually over the next few years. And if Tattooed Chef can continue growing its brand, it can grab a good chunk of the growth. On the other hand, it will need to starve off the incoming wave of competition first. Here are some vegan stocks to consider as well.
No. 1 Workhorse Group (Nasdaq: WKHS)
- Market Cap: $481M
- Industry: Electric Vehicles
- Short Interest: 28%
Workhorse Group is underperforming the market severely this year with big setbacks dragging share prices down. The company produces electric trucks and aircraft using advanced technology.
Between truck recalls and lower expectations, WKHS shares are down over 34% this year. And on top of that, it’s one of the stocks with higher short interest. Either short-sellers know something we don’t, or they are still not buying into the company.
After all, EV stocks are highly competitive right now. With competitors such as Rivian entering the market, Workhorse’s path just got much harder. If the company plans to become a mainstream EV truck maker, it will need to iron out the kinks first.
Is it Worth Investing in Stocks with Higher Short Interest
Looking at this list, you see a lot of higher growth areas that don’t have the results to show for it yet. Although they may be in a promising market, there are other things to consider. It’s good to see where these bets are taking place so you can decide for yourself.
Investing in stocks with higher short interest can be risky. That being said, if sentiment changes, heavily shorted stocks can be highly volatile. And when this happens, it’s easy to lose money.
On the other hand, shorting stocks can also be an excellent way to capture downside risk. Shorting is a natural part of markets that help determine value. If you are planning on shorting stocks with higher short interest, make sure to start small, or you could risk losing it all and then some.
Shorting involves borrowing shares, so it can be riskier than buying shares. Also, short-sellers technically have unlimited risk, the stock can continue going up forever. But if you buy shares, your investment can only drop to zero.
About Pete Johnson
Pete Johnson is an experienced financial writer and content creator who specializes in equity research and derivatives. He has over ten years of personal investing experience. Digging through 10-K forms and finding hidden gems is his favorite pastime. When Pete isn’t researching stocks or writing, you can find him enjoying the outdoors or working up a sweat exercising.