{"id":10369,"date":"2023-05-18T08:54:14","date_gmt":"2023-05-18T12:54:14","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/unraveling-the-long-and-short-of-squeezes\/"},"modified":"2023-05-18T08:54:15","modified_gmt":"2023-05-18T12:54:15","slug":"unraveling-the-long-and-short-of-squeezes","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=10369","title":{"rendered":"Unraveling The Long And Short Of Squeezes"},"content":{"rendered":"<div>\n<h2 class=\"subhead-embed color-accent bg-base font-accent font-size text-align\">Key takeaways<\/h2>\n<ul>\n<li>Short squeezes are when traders bet a company will fall in value, but the amount of short interest causes the price to pop upwards instead<\/li>\n<li>There\u2019s massive potential with short squeezes, but they\u2019re one of the highest risk plays you can make on the stock market<\/li>\n<li>Companies with short squeeze potential at the moment include Dillard\u2019s, Murphy USA and Wolfspeed &#8211; but anything could happen<\/li>\n<\/ul>\n<p>Short squeeze stocks are the sexy part of investing that have inspired legendary stories, TV shows and even films. Knowing how they work could lead to big returns, but make sure you know the risks so you don\u2019t play with fire.<\/p>\n<p>Below we\u2019ve got an explanation of what short stocks are, how you can benefit from them and the current companies with short squeeze potential &#8211; because while short stocks are risky, they can be fun too.<\/p>\n<p><em>Short squeezes can be a part of your investment strategy without the stress of relying on individual stocks. Q.ai\u2019s <\/em><em data-ga-track=\"ExternalLink:https:\/\/learn.tryq.ai\/blog\/short-squeeze-kit?utm_campaign=Forbes&amp;utm_medium=article&amp;utm_source=Forbes\">Short Squeeze Kit<\/em><em> takes away the hours of research needed with an AI algorithm that sifts through historical data, market trends and sentiment to find the best potential candidates for a short squeeze.<\/em><\/p>\n<p><fbs-ad position=\"inread\" progressive=\"\" ad-id=\"article-0-inread\" aria-hidden=\"true\" role=\"presentation\"><\/fbs-ad><\/p>\n<p><em>The Kit refreshes weekly, so you\u2019re never missing out on the hottest new opportunities for a short squeeze. Thanks to a nifty AI helper, the Kit is a great option for those looking to grow their returns while getting exposure to high short potential companies.<\/em><\/p>\n<p><em data-ga-track=\"ExternalLink:https:\/\/refer.tryq.ai\/rPJtRhhOUyb\">Download Q.ai today<\/em><em> for access to AI-powered investment strategies.<\/em><\/p>\n<h2 class=\"subhead-embed color-accent bg-base font-accent font-size text-align\">What are short squeeze stocks?<\/h2>\n<p>Companies and their stocks rise and fall for a number of reasons: earnings reports, market conditions and new product releases, to name a few. But sometimes the writing is on the wall for investors that a company isn\u2019t doing so well, so they bet that the stock price will fall, or \u2018short\u2019 it. When the stock price does fall, the short seller makes money.<\/p>\n<p>A short squeeze is when those bets don\u2019t pay off. High short interest is where the amount of shares gets bought up, making it tricky for short sellers to cover their positions. A sudden change in fortunes for a company could also drive up share prices. Short sellers then either need to close out their positions or buy up more stock so they don\u2019t lose money, creating a short squeeze. This sudden, massive increase in demand can send the price soaring in a short space of time.<\/p>\n<p>Sounds simple, right? But investing in a short squeeze is far from it.<\/p>\n<h2 class=\"subhead-embed color-accent bg-base font-accent font-size text-align\">Famous short squeezes<\/h2>\n<p>The best way to show what short squeezes are is to go through some of the high-profile examples because some short squeezes are the stuff of legend. One of the most famous examples is the 2008 Volkswagen and Porsche saga, where Porsche announced it had bought almost all of struggling Volkswagen\u2019s circulating stock.<\/p>\n<p>Around 12.5% of VW stock was on loan to short sellers when this happened, so they closed out their positions as quickly as possible &#8211; driving the share price through the roof. At one point Volkswagen was the most valuable company in the world, with shares at over \u20ac1000 and short losses in the tens of billions. Porsche CEO Wendelin Wiedeking was charged with market manipulation after the drama, but eventually the charges were dropped in 2016.<\/p>\n<p>And, of course, who can forget the infamous Gamestop rally? The subreddit WallStreetBets, home of meme stocks and diamond hands, was the center of the controversy, ending with a congressional hearing. One user noticed traders shorting GameStop, which sparked a vast influx of retail investors buying the stock and even Elon Musk tweeting about the squeeze, driving GME shares from $20 to a peak of $480.<\/p>\n<p>Some institutional investors had to close out their positions, but it all fell apart when the retail investing platform Robinhood suspended trading on the stock after getting dangerously close to its collateral limit. It was kaput for the short squeeze and some GameStop investors lost thousands of dollars.<\/p>\n<h2 class=\"subhead-embed color-accent bg-base font-accent font-size text-align\">How can investors benefit from them?<\/h2>\n<p>As we can see from the above two examples, short squeezes are volatile and not for the faint-hearted. The exciting part is that there\u2019s theoretically no limit to how high a stock can go, which works out extraordinarily well for some investors.<\/p>\n<p>Benefiting from a short squeeze is all about timing and a little bit (or a lot) of luck because nobody really knows exactly when one will happen. Short interest percentages can indicate whether a rally might occur: the higher the short interest percentage, the better the chances. It\u2019s the same with short-interest ratios.<\/p>\n<p>Once the squeeze has been squoze, the stock price will begin to fall, so timing is absolutely everything if you want to benefit from a short squeeze. No slacking off here: you need to pay attention by the minute in some instances, as a stock can turn that quickly.<\/p>\n<p>There\u2019s also the possibility of new short positions opening when traders bet a stock will fall in price again, but this is all about timing. It\u2019s somewhat akin to gambling, so the risk to capital involved is significant without the proper research.<\/p>\n<h2 class=\"subhead-embed color-accent bg-base font-accent font-size text-align\">Current short squeeze stocks to watch<\/h2>\n<p>So which stocks do short traders have their eye on at the moment? All of these stocks are holdings in our Short Squeeze Kit.<\/p>\n<h3 class=\"subhead3-embed color-body bg-base font-accent font-size text-align\">Dillard\u2019s<\/h3>\n<p>Premium department store chain Dillard\u2019s has been targeted by short sellers as brick-and-mortar stores continue to decline, but the stock had a huge rally in 2020 after showing impressive growth and turning around its earnings figures. 2023\u2019s economic headwinds could shake Dillard\u2019s, sending short interest in the stock soaring.<\/p>\n<h3 class=\"subhead3-embed color-body bg-base font-accent font-size text-align\">Murphy USA<\/h3>\n<p>Gas station chain Murphy USA caught some short interest after soaring crude oil prices have hurt the industry. However, the seasonal summer holidays boom is approaching and workers are returning to the office, which could fuel global oil demand and spark short investors to cover their positions.<\/p>\n<h3 class=\"subhead3-embed color-body bg-base font-accent font-size text-align\">Wolfspeed<\/h3>\n<p>Finally, electronics company Wolfspeed has plunged in value in the last month thanks to reporting difficulties in ramping up its production and weak revenue figures. But many insiders of the company have been buying up more stock, which could suggest the stock is undervalued and set to rise soon.<\/p>\n<p>None of these are guarantees, of course &#8211; short squeezes need a perfect storm to take off, and any of these factors could change at any time &#8211; but they\u2019re stocks to keep an eye on, or let AI investing help handle it for you.<\/p>\n<h2 class=\"subhead-embed color-accent bg-base font-accent font-size text-align\">The bottom line<\/h2>\n<p>Short squeezes are often lightning-fast, leaving investors counting their riches or licking their wounds. They definitely shouldn\u2019t make up the bulk of an investing strategy, but they can be a fun and lucrative way to make serious returns if you want a challenge. Just be prepared to lose funds just as quickly as you gained them.<\/p>\n<p><em>Another option is Q.ai\u2019s <\/em><em data-ga-track=\"ExternalLink:https:\/\/learn.tryq.ai\/blog\/short-squeeze-kit?utm_campaign=Forbes&amp;utm_medium=article&amp;utm_source=Forbes\">Short Squeeze Kit<\/em><em>, where the secret ingredient is an AI algorithm that can find new insights on stocks quicker than any human. The AI scans the data on thousands of US equities, using historical data and financial intel from multiple sources.<\/em><\/p>\n<p><em>The AI then refreshes the Kit\u2019s holdings each week to include the companies with promising short squeeze potential, so you can benefit from the upside without putting all your eggs in one basket and to help you build wealth.<\/em><\/p>\n<p><em data-ga-track=\"ExternalLink:https:\/\/refer.tryq.ai\/rPJtRhhOUyb\">Download Q.ai today<\/em><em> for access to AI-powered investment strategies.<\/em><\/p>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.forbes.com\/sites\/qai\/2023\/05\/18\/short-squeeze-stocks-to-watch-in-2023-unraveling-the-long-and-short-of-squeezes\/\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Key takeaways Short squeezes are when traders bet a company will fall in value, but the amount of short interest causes the price to pop upwards instead There\u2019s massive potential with short squeezes, but they\u2019re one of the highest risk plays you can make on the stock market Companies with short squeeze potential at the [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":10370,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-10369","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-markets","tag-featured"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Unraveling The Long And Short Of Squeezes | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Key takeaways Short squeezes are when traders bet a company will fall in value, but the amount of short interest causes the price to pop upwards instead\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, 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