Top 10 Most Shorted Stocks in 2023 & top 5 Short Squeezes
Justin Nugent
This article was last updated on 02/06/2023.
It’s 2023, and it’s once again short squeeze season. Short interest is running on high yet again, and hedge fund bears are targeting meme stocks yet again with massive short positions in hopes that a market drawdown will bring a meme stock meltdown of epic proportions. Ironically, this is the perfect breeding ground for a short squeeze — simply put, when too many traders move to one side of the boat, it’s bound to sink. Before we get into the top short squeezes of 2023 and the top 10 most shorted stocks right now, let’s cover a few basics.
What does it mean to short a stock?
To short a stock is to bet against a stock. By shorting a stock, you are selling a stock (that you do not own) in hopes of “buying back” the stock later at a lower price — ultimately pocketing the difference. You do this by “borrowing” the stock from a brokerage.
What is naked shorting?
Naked shorting is the act of shorting stock without borrowing shares from a brokerage. Though naked shorting is not illegal, the term became infamous during the meme stock mania of early 2021, when it was discovered that there were more shares of GME being shorted than there were in existence.
You can think of shorting a stock as the opposite of owning a stock. While owning a stock has defined risk (meaning you could not lose more than you put in), shorting a stock carries unlimited risk (meaning you could theoretically lose money infinitely depending on how high a stock’s price rises).
What is short interest?
Short interest is a measure of how many shares are currently sold short, and how many remain outstanding. This is often expressed in the form of the short interest ratio, which is the above data represented as a percentage. The higher the short interest ratio, the more explosive and likely the potential short squeeze will be. The top 10 most shorted stocks in 2023 (found below) represent the absolute highest short interest on the market relative to shares outstanding.
What is a short squeeze?
Short squeeze is a phrase that lives inside the nightmares of hedge managers everywhere. Generally, it is institutions who are the largest purveyors of the biggest stock shorts. For instance, it was the hedge funds Melvin Capital and Citadel who famously shorted Gamestop. Those two funds (alongside a few others) had truly massive short positions in GME — and as shares of GME began to rise, they received a margin call.
What is a margin call?
A margin call is essentially a red flag from your brokerage that too high a percentage of your account exists in the form of a loan. You can escape a margin call by either closing your position (often at a loss), or by adding more funds to your account. For these hedge funds, there was no choice — close out of their GME short positions for a loss, selling at whatever the market is asking, which in turn drove the price even higher.
The name for the upward spiral that occurs when hedge fund shorts are rushing for the door to escape their short positions is a short squeeze.
Believe us when we say — stock market traditionalists, fundamental analysts, and value stock holders hate this. You see it all over traditional stock market media. You can tell when you look at the search results for “meme stock” or “short squeeze” (examples below):
Sources: InvestorPlace, Cnet, CNN, Bloomberg, thedogofwallstreet, FastCompany
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If you leaned only on these headlines, you would think that memes were dead and gone.
Quotes like,
“Unlike other bubbles, meme-stock mania didn’t really help anyone.”
Seem to leave out events like…
The time retail GME traders donated thousands of dollars to the Dian Fossey Gorilla Fund
…Or the time someone donated $5,000 of their short squeeze gains to Northwest Harvest Food Bank…
…Or the multiple children’s hospital donations…
Here’s the thing: Bearish hedge funds unironically hate this. We know, it sounds like a generalization. It isn’t. Short squeezes are a nightmare for bearish hedge funds — and realistically, they could care less about the charitable acts of retail traders if it means it’s cutting into their end-of-year bonuses. Lucky for you, getting ahead of the institutions is what Market Rebellion does best. It’s the principle we were founded on.
“Wall Street was created to make money off you, not for you.”
With our HeatSeeker ® algorithm, we take a magnifying glass to the options market, analyzing every trade (yes, every trade) to get a look at what’s going on beneath the surface of the market. It’s how we were able to spot these trades.
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5 Times Market Rebellion’s Unusual Options Activity Predicted an Epic Short Squeeze
Before we get to this list, let’s be clear: The phrase “meme stock” is more or less meaningless. The list of what is and isn’t a “meme stock” is ever-evolving, and in 2023 meme stocks are essentially “anything that traditional stock market media doesn’t think should go up”. Unsurprisingly, traditional stock market media is wrong all the time. That’s why Market Rebellion strives to rebel against the traditional. We are not a hedge fund, and we never will be. On the contrary, we use unusual options activity to beat them at their own game. Here are just a handful of examples from where our unusual options activity service predicted massive squeezes using cheap, short-dated options.
CVNA January 2023: Carvana short squeeze sends options identified at $0.40 to a value of $11.40 — 42X
COIN August 2022: Coinbase short squeeze sends options identified at $0.20 to a value of $36.90 — 147X
FUBO August 2022: Fubo TV short squeeze sends options identified at $0.21 to a value of $3.15 — 15X
NVTA 55X August 2022: Invitae short squeeze sends options identified at $0.08 to $4.40 — 55X
BBBY November 2021: Bed Bath & Beyond short squeeze sends options identified at $0.41 to a value of $10.60 — 20X
These are just a handful of lesser known squeezes that took place under most people’s noses. Most people — but not Rebels. Market Rebels had behind the scenes knowledge due to Market Rebellion’s state of the art HeatSeeker ® algorithm. Not only that, Market Rebellion was among the very first to identify unusual options activity in Gamestop right before the legendary short squeeze of 2021.
Get in on the action, and start discovering these trades before the squeeze kicks off, with Market Rebellion’s unusual options activity.
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Okay, but what comes next. For timely trades crafted by professionals, you could subscribe to Market Rebellion’s unusual options activity service — it’s how we uncovered the trade ideas above, and it’s our secret weapon for beating the hedge funds and institutions at their own game. But if you’re looking for more general knowledge, then look no further. Below, you’ll find the top 10 most shorted right now, updated for 2023. These highly shorted stocks have the most short interest of any in the entire stock market — making them a powder keg for a potential short squeeze.
Top 10 Most Shorted Stocks Right Now (2023)
Keep in mind, this list changes constantly as bearish hedge funds get blown up and rush to buy back their short positions
Most shorted stock: SI — Silvergate Capital Short Interest
Float shorted | Total short interest | Total float |
70.44% | 19.6M | 27.9M |
Second most shorted stock: CVNA — Carvana Co.
Float shorted | Total short interest | Total float |
59.67% | 55.6M | 93.2M |
Third most shorted stock: BBBY — Bed Bath & Beyond Inc.
Float shorted | Total short interest | Total float |
47.01% | 52.9M | 112.5M |
Fourth most shorted stock: MARA — Marathon Digital Holdings
Float shorted | Total short interest | Total float |
46.14% | 51.3M | 111.1M |
Fifth most shorted stock: ALLO — Allogene Therapeutics Inc.
Float shorted | Total short interest | Total float |
42.81% | 34.2M | 79.8M |
Sixth most shorted stock: LHC — Leo Holdings Corp. II
Float shorted | Total short interest | Total float |
41.77% | 1.9M | 4.6M |
Seventh most shorted stock: PXMD — PaxMedica Inc.
Float shorted | Total short interest | Total float |
40.93% | 316K | 771K |
Eighth most shorted stock: BYND — Beyond Meat Inc.
Float shorted | Total short interest | Total float |
39.26% | 22.5M | 57.4M |
Ninth most shorted stock: EVGO — EVgo Inc.
Float shorted | Total short interest | Total float |
39.18% | 26.5M | 67.7M |
Tenth most shorted stock: WE — WeWork Inc.
Float shorted | Total short interest | Total float |
38.76% | 83.5M | 215.4M |
You’ve discovered the top 10 most shorted stocks in the market… You’ve unlocked insights into their most recent short-interest-driven rallies…
NOW, learn how to trade them. Successfully exploiting these short-driven moves takes a lot more than just buying-and-waiting — but don’t worry. Market Rebellion has you covered. Submit your email to receive our free guide to trading heavily shorted stocks: 7 Rules for Short Squeeze Hunters to Live By
When the next big mover hits the scene, make sure you know how to trade it. Simply submit your email to see what you’re missing.
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