There are company fundamentals and market fundamentals. Based on the latter, many traders changed their financial lives during the GameStop (NYSE:GME) and AMC (NYSE: AMC) short squeeze in late January 2021. Despite having weak fundamentals, these stocks rose rapidly in value.
As a consequence of betting against short sellers, who had to cover their positions as they drove stock prices higher, a short squeeze snowball effect took place. In contrast to a more complex operation of short selling, investors have an easier ride of simple stock exposure.
Short squeeze events are heralded by high short interest, trading volume spike, rapid stock price rise, and short interest ratio. Here are three stocks with the potential for a short squeeze in March.
Novavax – 41.58% short interest
Over the month, this pharma stock is up 53%. Unlike other companies in the sector, Novavax Inc (NASDAQ:NVAX) has a narrow revenue pipeline resulting from its heavy focus on COVID-19 vaccines. This is evident from Novavax’s earnings report for Q4 2023, which reported that its revenue shrunk by 50%, from $1.98 billion in 2022 to $984 million.
In May 2023, Novavax urged governments to deliver on their existing contracts, including $2.1 billion in advanced purchase agreements into 2025. With negative earnings per share for full-year 2023 at $5.41, Novavax attracted a large pool of short sellers, presently having 41.58% of the float shorted.
The CDC further amplified their confidence by reporting low vaccination uptakes. As of March 1st, the uptake for updated COVID-19 vaccines is 13.1%. However, the company does offer RSV vaccines, which is at 22.4% uptake among the 60+ population.
NVAX’s relative strength index (RSI) is 53, and its 180-day put-call ratio (open interest) is 2.0578, suggesting bearish sentiment.
Beyond Meat Inc. – 38.25% short interest
Focusing on displacing meat products with simulacrums, Beyond Meat Inc (NASDAQ:BYND) stock is up 30% over the month. The company has a long streak of net income losses, having had consecutive quarterly drains since Q2 2020.
In the latest Q3 2023 earnings report delivered in November, Beyond Meat reported an 8.7% year-over-year decrease in revenue to $75.3 million, providing another net income loss of $70.5 million. At this point, it is safe to say that the company’s business model revolving around more expensive meat replacements is not working.
Furthermore, France may be setting a trend where plant-based products cannot use meat labels for marketing purposes. With a 180-day put-call ratio of 2.9587, BYND’s relative strength index (RSI) is at 51.
MicroCloud Hologram – 62.98% short interest
Over the month, MicroCloud Hologram Inc (NASDAQ:HOLO) stock has gone down 80%, although it is still up 34% over three months. This China-based company should be considered as highly speculative vaporware. Although focusing on the application of holographic technology, MicroCloud Hologram has yet to deliver a single annual report despite being founded in 2020.
Moreover, the company announced a holographic virtual digital human, adopting the ChatGPT pre-training model, in September 2023. This product, similar to the AI depiction in Blade Runner 2049 movie, is yet to materialize. Investors took this as riding the AI hype, resulting in a high short float at 62.98%.
HOLO’s short interest ratio based on MarketBeat data is 0.815 with 0.1 days to cover (as of February 15th). This points to high volatility that could trigger a short squeeze as a contrarian indicator.
***
Disclaimer: Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.
This article was originally published on The Tokenist. Check out The Tokenist’s free newsletter, Five Minute Finance, for weekly analysis of the biggest trends in finance and technology.