Most shorted Nasdaq stocks: BBBY, BYND among least liked shares
Tough macroeconomic environment has hurt many stocks in 2022. The fears of recession and bearish investor sentiment have been especially painful for companies with weak financials, pushing their valuations to fall. This risk-off attitude has also prompted short sellers to raise their bets amid unfavorable business conditions.
Here we take a look at the most shorted stocks on the Nasdaq stock exchange, providing an overview of the equities that are currently on the short-selling radar.
What is short selling?
Short selling is an activity that involves borrowing a security, such as a stock, with the expectation that its value will decline in the future. Market participants who frequently engage in it are known as “short sellers”.
Short sellers could opt to use fundamental analysis to find potential candidates for shorting. They would aim to find companies that are suffering in the current macroeconomic environment or whose business model is becoming outdated or outpaced by the competition. They could also look to identify businesses that have weak finances and are likely to file for bankruptcy.
Meanwhile, other short sellers may rely on technical analysis to identify charting patterns or price and volume indicators that could be signaling an upcoming decline in the value of the assets at hand.
There are two approaches to short selling traders can choose from: naked and covered. Naked short-selling involves shorting a security without owning it, for example, by trading derivative contracts. The covered short selling refers to owning the security before selling it.
What is your sentiment on BYND?
Top most shorted stocks on Nasdaq
The following list of the most shorted stocks has been compiled using Yahoo Finance’s stock screener to filter the equities that are listed in all of the Nasdaq’s tiers including the Global Select Market, Capital Market, and Global Market. The data was pulled on 13 November but the short interest data corresponds to 30 October.
The stocks in the list are sorted based on their short interest. This indicator expresses the percentage of a company’s total outstanding shares that are currently being borrowed by short sellers.
Beyond Meat (BYND)
Short interest: 36.82%
Beyond Meat (BYND) is a producer of plant-based meat headquartered in El Segundo, California. The company’s products include Beyond Burger, Beyond Beef and Beyond Sausage.
Beyond Meat stock lost 76.6% year-to-date, as of 14 November, as the company is facing a sustained decline in its retail sales in the US. In addition, macroeconomic conditions have made it tougher for the firm to raise capital in an environment plagued by rising interest rates and a low appetite for risk.
Several top executives have departed the green meat producer, including Philip Hardin, the company’s CFO, and Deanna Jurgens, the firm’s CGO (chief growth officer). Beyond Meat suspended its COO Doug Ramsey after he was arrested for alleged violence.
Furthermore, in October, the firm announced that it will trim its workforce by 19% amid a slowdown in sales. Downbeat news and macroeconomic headwinds have lured short sellers, making BYND the most shorted stock on the market.
BYND live stock price chart
Bed Bath & Beyond (BBBY)
Short interest: 34.96%
Bed Bath & Beyond (BBBY) is a retail company that owns then buybuy BABY and Harmon brands. The firm operates hundreds of stores, mainly in the US and Canada. As of February 2022, BBBY owned and operated more than 900 stores, although it is closing some as part of ongoing restructuring.
The price of BBBY stock has fallen nearly 73% since the year started, as of 14 November. After months of rumors that the company was about to go bankrupt, Bed Bath & Beyond managed to secure a $500m capital injection that helped the troubled retailer survive for a little longer.
Some unfortunate developments, including the unexpected death of CFO Gustavo Arnal, challenging supply chain environment and news of a data breach that led to the departure of its CTO, have kept short-sellers circling and have made BBBY one of the most shorted stocks on the market.
Moreover, the firm recently filed to sell up to $150m of its common shares in an at-the-market offering following another $75m it raised through the same scheme back in August.
BBBY live stock price chart
EVGo (EVGO)
Short interest: 31.05%
Founded in 2010, EVGo (EVGO) is one of America’s largest independent networks of charging stations for electric vehicles. According to the firm, more than 130 million Americans live within 10-miles of an EVGo charger.
Since the start of 2022, EVGO stock has accumulated a 25% loss. One of the likely reasons why EVGo is heavily shorted is a report from a prominent short seller called Fuzzy Panda Research that pointed to several flaws in the company’s business model.
According to Fuzzy Panda, an independent study from UC Berkeley revealed that 25% of the firm’s chargers were broken, plus a key patent was denied this year, and the company was tied with the controversial financier Jeffrey Epstein.
The price has recovered slightly since the report came out on 29 June, but the findings appear to have been enough to put EVGo on the list of most shorted Nasdaq stocks.
EVGO live stock price chart
Upstart Holdings (UPST)
Short interest: 30.21%
Upstart (UPST) is a California-based financial technology company that uses artificial intelligence to facilitate the process of obtaining a loan. Upstart partners with banks and other financial institutions and uses algorithms and advanced computer programs to identify the best lenders for each candidate.
Why is UPST among the most shorted stocks on Nasdaq? The price of UPST stock has declined more than 85% year-to-date, as of 14 November, as the US Federal Reserve (Fed) continued to hike interest rates, slowing demand for loans and hurting Upstart’s business.
The company’s business model, which relies on third parties to generate the loans it offers, could suffer in the current environment as lenders may tighten their credit conditions. This could lead to Upstart struggling to find attractive offerings for consumers. In addition, the beginning of recession could result in higher delinquency rates.
The firm announced in November that it will lay off 140 employees – around 7% of its workforce – as loan applications have kept declining.
UPST live stock price chart
Vertex Energy (VTNR)
Short interest: 29.57%
Vertex Energy (VTNR) is a Houston-based refiner and marketer of oil and oil-based products. The company provides its services in 15 states within the US territory and, by the end of December 2021, it had aggregated nearly 90 million gallons of used motor oil and other similar products along with refining approximately 80 million gallons of the same materials.
The company’s share price has been dropping since June 2022 as the price of oil has decreased. The firm’s financial performance is heavily tied to that of crude as the price of its products fluctuate alongside petroleum prices.
Moreover, Vertex recently announced that the completion of a flagship project in Alabama has been delayed to the first quarter of 2023. Initially, the company set forth a timetable that forecasted the completion before 2022 ended.
With the global economy possibly entering a recessionary cycle, oil prices may be expected to fall. In this scenario, companies like Vertex stand to perform poorly, leading short sellers’ attention to the stock.
VTNR live stock price chart
The bottom line
All stocks listed as most shorted stocks on the Nasdaq stock exchange displayed troubled balance sheets or business models, putting them on the short seller’s radar.
This data shouldn’t be used as a substitute for your own research. Note that short selling is a risky endeavor and shouldn’t be handled with thorough preparation. Always conduct your own due diligence before trading or investing, looking at the latest news, analyst commentary, fundamental and technical analysis.
Note that past performance does not guarantee future returns. And never trade money you cannot afford to lose.
FAQs
Why do stocks get shorted?
Market participants may opt to short a stock because the company is hurt by a challenging environment such as a decline in sales, inability to repay debt, or other struggles. In addition, they could opt to short a stock if they believe the price will decline in the future based on certain technical indicators. Always conduct due diligence before trading.
What happens when a stock gets shorted?
There are two approaches to short-selling traders can choose from: naked and covered. The naked short-selling involves shorting a security without owning it, for example, by trading derivative contracts. The covered short-selling refers to owning the security before selling it.
How do you find the most shorted stock?
Stock screeners such as that of Yahoo Finance can be used to obtain a list of the most heavily shorted stocks.
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