The short positions of these 7 stocks have surged - a must-see before chasing short orders.

Recently, investors searching for “stocks with the highest short positions” are highly enthusiastic. In the Capital Market, this niche can indeed allow retail investors to achieve significant profits in a short period—provided you make it out alive.

To be honest, this is a contest against the short positions. The logic is simple: when short positions are forced to cover their losses, they will frantically buy back their positions, and the trading activity at that time can bring huge profits to the long traders. But the problem is that the stocks attracting short positions are often fundamentally weak. So before betting in this game, be sure to keep your eyes wide open.

What Does High Short Positions Mean?

When the short interest of a stock reaches over 30%, it means that there are a large number of short positions betting that it will fall. Once these shorts collectively take a loss, it can trigger a “short squeeze”—at this point, the stock price may soar in a short period of time.

But it's like riding a roller coaster; exciting as it is, the risks are enormous.

7 Stocks to Watch

SilverGate Capital (SI) —— Difficulties in the banking sector

SI has evaporated 88% of its stock price over the past year and has fallen another 17% this year. This California-based digital currency bank is facing a crisis of confidence.

Data Overview:

• Short positions interest rate: 72.8% (ranked high)
• Replenishment Cycle: 2.47 days
• Price-to-Book Ratio: only 0.75 times (valuation is not expensive, but the business is poor)

Wall Street analysts have set a target price of $17.56, which represents a 22.5% upside from the current price. But why are short positions still increasing? This indicates that the market is fundamentally not optimistic about the future of this bank. New investors should try to avoid it.

Carvana (CVNA) —— The “vanity bubble” of the used car platform

During the pandemic, the online used car retailer CVNA was thriving, but after the pandemic subsided, it disappeared from the scene. It fell by 95% within a year, and although it recently rebounded by 73%, that is just a dead cat bounce.

Key Indicators:

• Short positions interest rate: 71.37% (the second highest in the entire market)
• Replenishment cycle: 2.99 days
• Assessment: Possible value traps

Analysts believe that this company charges too much for convenience, and once consumer spending declines, consumers will turn to lower-priced options. The target price of $9.58 only implies a 20% rise, while the potential downside risk is greater. Stay far away.

Root (ROOT) —— The “beautiful scam” of Insurtech

ROOT, claiming to be the first fully mobile insurance company in the United States, has risen by 24% this year, but fell by 84% last year. The company's problems are fatal: net profit margin is deeply negative, and revenue growth over three years is only 4.8%.

Insurance companies need a strong financial foundation to survive, and ROOT clearly does not have one.

• Short positions interest rate: 17.56%
• Replenishment cycle: 10.96 days (relatively long, indicating strong confidence among short positions)
• Analyst target price: $7.68 (implying a 44% rise, but risks far outweigh rewards)

PaxMedica (PXMD) — The “clinical gambler” of biopharmaceuticals

This biopharmaceutical company focused on the treatment of neurodevelopmental disorders has fallen 61% within a year. As a company in the early research and development stage, it relies entirely on clinical results, yet has no analyst coverage.

• short positions interest rate: 16.05%
• Replenishment cycle: 2.97 days
• Characteristics: Cash-rich but no income, it's just a gamble.

Risk Warning: The volatility of small-cap pharmaceutical stocks is extremely high, retail investors should proceed with caution.

Upstart (UPST) —— “growth illusion” of the AI lending platform

The AI-driven consumer loan platform UPST has risen 40% this year, but has still fallen 87% over the year. Worse, the company has a negative revenue growth rate over the past three years, a net profit margin loss, and a very weak balance sheet.

• Short positions interest rate: 40.3% (close to the upper limit of most tech stocks short positions)
• Replenishment cycle: 5.02 days
• Wall Street Consensus: Moderate Sell, Target Price $14.88 (implying 17% downside risk)

Analysts are not optimistic, so retail investors should refrain from “betting”.

EVgo (EVGO) —— “virtual fat profits” in electric vehicle charging

Although it is labeled as EV charging infrastructure, EVGO's data is a bit awkward: recent quarterly revenue of $10.51 million (a 70% increase quarter-on-quarter), but a net loss of $13.22 million. Earn one cent, lose one dollar.

• short positions interest rate: 37%
• Replenishment period: 20.62 days (this is the longest among all stocks, indicating strong confidence in short positions)
• Analyst consensus: Hold, target price implies an upside of less than 5%

The returns are too thin, the risks are too high, it's not worth the risk.

Beyond Meat (BYND) —— The “past star” of plant-based meat

The once “king of plant-based meat” has now become a market orphan. It rebounded by 52% this year, but still fell by 58% over the year. Young consumers do love plant-based meat, but whether the business model can be profitable is still debatable.

• Short positions interest rate: 36.88%
• Replenishment cycle: 10.26 days
• Risk Assessment: Possible Value Traps
• Analyst: Moderate sell, target price $11.80 (implying 37.5% downside risk)

Summary: High short positions ≠ Buy signal

These stocks with highest short interest indeed have theoretical opportunities for a short squeeze, but fundamentally, most of them are bad businesses. Short positions are not fools; they have reasons for shorting these stocks.

Core Recommendation: If you are not a professional trader, stay away from stocks with high short positions as much as possible. Even if there is a 10% chance of a short squeeze, it is not worth taking on the potential risk of a 70% decline.

Playing a short squeeze requires strong timing skills and psychological resilience. For retail investors, choosing fundamentally solid companies to hold long-term provides more stable returns.