The WallStreetBets group on Reddit mobilized around GameStop and several other of heavily shorted stocks this week, pushing them to jaw-dropping highs. And these 6 stocks might be the next names to rocket higher on a short squeeze.
Redditors are taking over the market.
The forum’s unprecedented influence over the last week has taken heavily shorted and “fundamentally hated” names like GameStop (NYSE: GME), AMC Entertainment (NYSE: AMC), Blackberry (NYSE: BB), Nokia (NYSE: NOK), Tootsie Roll (NYSE: TR), and Bed Bath & Beyond (NASDAQ: BBBY) on a wild ride higher in an effort to squeeze money out of the short bets from Wall Street’s elite.
The jaw-dropping and volatile rise in GameStop in particular has dominated headlines. The struggling video game retailer is up 4,588% year-to-date, and nearly 350% for the week.
Just last week, the stock was trading at around $40. Cut to Monday, GameStop shares rose as much as 270%. The stock jumped another 95% on Tuesday. Wednesday it added 157%.
And on Thursday, the stock ended the day down -44%, tumbling after free stock trading platform Robinhood restricted trading of the stock on its app, but at one point had risen as high as $492 a share.
But with GameStop having its first down day in six days, many are wondering which of the market’s most hated stocks could become Redditors’ next targets.
The hunt for heavily shorted stocks is being led by the WallStreetBets group on Reddit, which boasts around 2.8 million members.
One reason GameStop was singled-out and WallStreetBets users mobilized on the stock in the first place was its level of short interest. The stock entered the week with 139% of its available shares borrowed and sold short. In the days since, GameStop’s eye-popping rally higher has forced the likes of Citron Research and Melvin Capital to abandon their bearish positions.
Now, traders are looking for stocks that could be next. Vir Biotechnology (NASDAQ: VIR) and SunPower Corp (NASDAQ: SPWR) could be targeted next, with both stocks having short interest levels above 30% of their floating shares.
Both stocks are already sparking interest. Vir Biotech is up 119% so far this year, and 38.5% over the last week. The biotech surged as much as 82% on Wednesday amid speculative fervor. SunPower’s rise has been less volatile, and the stock has been steadily climbing this month, gaining 114% in January.
D.A. Davidson analyst Rishi Jaluria also tapped Fastly Inc (NYSE: FSLY), J2 Global Inc (NASDAQ: JCOM), CyberArk (NASDAQ: CYBR), and SailPoint (NYSE: SAIL) as stocks that could become the next GameStop.
Jaluria said in a note that all four stocks are “attractive short-squeeze candidates” given their relatively high levels of short interest.
Reddit traders are “not looking at anything fundamental at all,” said Matt Maley, chief market strategist at Miller Tabak. “They’re just buying the most shorted names.”