Recent signs that inflation is easing has fueled more investor optimism, and traders are snapping up shares of heavily shorted names. This week, both the Nasdaq Composite and S & P 500 touched their highest levels since April 2022. All three major indexes, including the Dow Jones Industrial Average , are on track for weekly gains. Cooler-than-anticipated inflation data helped fuel the market rally . The market’s exuberance has also been enough to buoy the stocks that Wall Street is betting against, such as Carvana . Shares of the used car retailer are up nearly 30% on the week – and have gained more than 700% in 2023 – even as JPMorgan warned that shares could shed more than 70% of their value. Against this backdrop, CNBC Pro used FactSet data to screen for stocks that are most vulnerable to a short squeeze. A short squeeze occurs once a shorted stock climbs higher, forcing investors who have short bets on shares to cover their positions. This ultimately pushes the stock price up. Shares of the companies below are listed on the New York Stock Exchange and Nasdaq with a short interest as a percent of float at 25% or greater and a market cap of at least $100 million. Carvana stock has seen its short interest decline roughly 13% from June 15 to June 30, but there’s still nearly 50% short interest in shares of the car company. The stock has surged in 2023, despite worry as recently as December that the company could enter bankruptcy proceedings. CVNA YTD mountain Carvana stock has gained more than 750% since January. Novavax , meanwhile, has about 42% short interest from investors. Short interest on the stock rose 18% from the middle to the end of the June. Shares are up about 20% this week, after the biotech company said on Monday that Canada has agreed to pay $350 million over unused Covid-19 vaccines . Novavax stock has slipped more than 15% in 2023. It’s among a handful of pharmaceutical and biotech names attracting shorts, including ProKidney and bluebird bio . NVAX YTD mountain Novavax stock. Buzzy artificial intelligence stock C3.ai also made the list, with about 38% of its shares sold short. Overall short interest in the name increased 8.7% from June 15 to June 30. The company has faced tumult in recent weeks, buffeted by short sellers . Nevertheless, shares of C3.ai are up about 245% in 2023. AI YTD mountain C3.AI stock. A swath of green energy stocks and electric vehicle names also made the list, including Sunnova Energy , Maxeon Solar , Lucid and Fisker . See below for the full rundown of potential short squeeze targets.
