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10 most heavily shorted stocks
Betting on these 10 shorted stocks could mean big rewards, but it’s important to know the risks.
Short selling can be profitable, but there are significant risks to consider. Here are 10 of the most-shorted U.S. stocks right now to keep an eye on, and how shorting works.
10 most heavily shorted stocks
Here are the 10 most heavily shorted stocks by short float percentage. Short float percentage refers to the percentage of a company’s stock that institutional investors have shorted compared to the stock available for public trading.
Table updates nightly with data from the most recent market close.
|Stock||Short float percentage||Outstanding shares||Shares Shorted||Market capitalization||Last close price|
|Ligand Pharmaceuticals Incorporated (NASDAQ:LGND)||0.64%||16,081,300||5,969,528||$2,270,357,760||$141.18|
|The Macerich Company (NYSE:MAC)||0.38%||149,771,008||34,307,209||$1,969,488,640||$13.15|
|Bed Bath & Beyond Inc (NASDAQ:BBBY)||0.35%||121,215,000||31,771,578||$3,184,318,208||$25.99|
|Tanger Factory Outlet Centers (NYSE:SKT)||0.59%||93,569,800||36,835,083||$1,487,759,744||$15.90|
|The Children's Place (NASDAQ:PLCE)||0.40%||14,587,100||3,191,160||$1,031,016,256||$70.68|
|iRobot Corporation (NASDAQ:IRBT)||0.40%||28,199,100||6,521,982||$3,257,841,920||$118.14|
|B&G Foods (NYSE:BGS)||0.36%||64,252,900||15,965,411||$2,000,192,768||$31.57|
|International Flavors & Fragrances Inc (NYSE:IFF)||0.64%||106,937,000||43,998,192||$34,546,348,032||$139.14|
|The GEO Group (NYSE:GEO)||0.34%||121,315,000||27,849,468||$904,950,208||$7.39|
How does shorting stocks work?
Stock shorting has dominated headlines as Redditors hyped up stocks hedge funds were betting against. But what does it mean to short a stock?
When shorting a stock, investors borrow shares they believe will decline in value and sell those shares. These investors hope the stock will continue to fall in value so they can buy back the shares at a lower price and pay off the loan, pocketing the difference.
Essentially, it’s betting that the value of a stock will fall. If you’re right, you make money. And if you’re wrong — well, you could potentially be on the hook for a lot more than you bargained for. And that’s because there are theoretically no limits to how high a stock may rise, and the more it rises, the more you lose.
Taking a contrary position to shorting can be profitable, too. By investing in a shorted stock, you contribute to the stock’s value. As a result, the stock price rises and puts pressure on those with short positions to close positions by buying even more — which drives the price up further.
Either way, investing in shorted stocks can be profitable. In fact, some of the most heavily shorted stocks on the S&P 1500 index have actually climbed this year.
Why do shorted stocks matter?
For evidence of the power of shorted stocks, look no further than GameStop.
In January 2021, GameStop was among the most shorted stocks on Wall Street. The hedge funds that bet against it stood to make a lot of money if GameStop’s stock stayed low. But participants in the Reddit message board Wallstreetbets noticed the GameStop shorting trend and decided to raise its price and squeeze hedge funds that had bet against the company.
Thanks to Reddit, retail investors flocked to buy GameStop’s stock. As a result, the stock skyrocketed in value by over 1,000%. And the hedge funds that shorted the stock lost billions.
There’s money to be made in shorting stocks, but the GameStop rollercoaster ride demonstrates just how dangerous and temperamental the game can be. Before getting involved, investors should exercise caution.
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The risks of shorting stocks
Before you hop on any short stock bandwagons, take a moment to consider the risks.
First, no investment is risk-free — something that holds especially true of investing in shorted stocks. Implementing short selling as a trading strategy is something that should only be attempted by experienced investors. And that’s because if you short a stock and the price unexpectedly goes up, you may owe far more than your initial investment — especially if the rising stock price causes other short sellers to start closing out their positions.
And on the other side of this equation, backing a shorted stock may seem like a lucrative opportunity, but stocks under this type of pressure tend to be highly volatile. With no clear exit strategy, you could stand to lose a sizable amount of capital.
Before getting involved in short stocks, be prepared to monitor your positions with attention and care. These stocks are volatile and behave erratically.
Short selling is risky — and potentially lucrative. Do the risks outweigh the potential gains? It depends on your investment goals and experience level. To invest in shorted stocks, review your platform options to find the brokerage account that best fits your investment goals.
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