While waiting for the Reddit IPO to (likely) crash and burn based on massive oversubscription and limited prospects, some retail traders see the stock as a short-squeeze superstar in the making. Since so many expect the stock to suffer once it hits public markets, the thesis affirms that massive short selling from the outset will artificially suppress per-share pricing. At the same time, high borrowing costs increase the chances of rapid position closing, which triggers a short squeeze.
While that theory may bear fruit, much more enticing short-squeeze stocks are out there that offer greater upside potential — on both a short-squeeze basis and as standalone investments. These three short-squeeze stocks embody both traits and short-squeeze hopefuls would be well advised to consider them instead of hinging hope on a Reddit reverse pump-and-dump.
Intuitive Machines (LUNR)
Intuitive Machines (NASDAQ:LUNR) remains high on the list of short-squeeze stock candidates as shares remain woefully suppressed after a space flight mishap brought shares down to Earth. Not only does the reaction seem overblown in the first place, but short sellers may have overplayed their hand as short interest remains north of 34% despite a 50% drop in per-share pricing over the past month.
The next big news for the company will come soon once sunlight returns to the Moon’s south pole and (hopefully) reawakens Intuitive’s lander. If and when that happens, the ongoing moon research mission will continue as its solar systems power data collection and transmission tech. While a successful restart to the mission will prove beneficial to researchers and space enthusiasts alike, it could also send shares skyrocketing — kickstarting the short-squeeze stock into the stratosphere.
Desktop Metal (DM)
3D-printing company and penny stock Desktop Metal (NYSE:DM) is one of the most-shorted stocks today, with a whopping 34% short interest. However, the company’s short-squeeze stock prospects are apparent on two fronts: first, per-share pricing is well below $1, meaning there’s less juice to squeeze from a short position, which could trigger imminent closures. Second, the stock is solid on its own merits and just posted record recurring revenue. The company marked $65 million in annual recurring revenue, a 29% year-over-year increase, while it dropped its overall net loss to just $323.3 million. In comparison, it lost a whopping $740.3 million last year.
While the modest improvements may not seem much, consider who else believes in Desktop Metal’s core operational structure. Strategic investors include Alphabet‘s (NASDAQ:GOOG)(NASDAQ:GOOGL) Google and car-making megalith Ford (NYSE:F). If these blue-chip companies see something worth investing in long-term, rest assured there’s a place for Desktop Metals in a well-rounded portfolio. Its short-squeeze stock potential just makes the opportunity that much sweeter.
Blink Charging (BLNK)
Blink Charging (NASDAQ:BLNK) may have marked record revenue in a Mar. 14 earnings report, but the stock remains suppressed, setting up a perfect short-squeeze stock opportunity. Blink’s fourth-quarter report included a 130% increase in full-year revenue, year-end gross profit of $40.2 million (29% of revenue, which isn’t bad for an infrastructure-heavy stock like BLNK), and more than 23,000 charging installations throughout 2023. Despite the solid performance, shares dropped by nearly two-thirds back toward penny stock territory. At the same time, short interest remains high, clocking in at more than 30%.
The report marked a five-quarter streak of beating analyst expectations, further reinforcing Blink’s short-squeeze stock potential over the long run, particularly since shares are so low that there’s little to be gained by staying short. Ultimately, just a few closing positions could trigger a massive uptick in per-share pricing, especially if management’s plan to expand manufacturing to 50,000 annual units begins bearing fruit in 2024.
On the date of publication, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
