Looking Back At The 10 Most Shorted Stocks Of December 2022

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Key Takeaways

  • Shorting stock became widely popular in 2020 as retail investors started to invest in stocks hedge funds were shorting as a way to financially harm them.
  • While the retail trade of shorting stocks has lost momentum, it still continues in 2023.
  • Both large cap and small cap stocks are shorted, usually due to poor business outlook and performance.

While you may not hear news of shorting stocks daily anymore, investing your money through shorting stocks is still a viable strategy. Because of this, some investors will want to know which stocks have the most significant short positions as a way to earn a return on their money. Here is a list of the most shorted stocks from December 2022.

The Interest In Shorting Stocks

Hedge funds, other institutional investors, and even some retail investors have made shorting stocks a part of their investment process for years. But shorting stock really reached the masses in 2020 with the rise of the Reddit community, WallStreetBets. Everyday retail investors, many with limited investment knowledge, flocked to the subreddit, and in the process, learned how to stand up to big business by turning certain stocks into meme stocks.

The strategy was to identify stocks with a large short position and start buying shares to increase prices. As the price moved higher, those shorting the stock would get margin calls and be encouraged to buy shares to cover their potential losses. This would drive the price even higher, resulting in a short squeeze.

There is debate over how well this plan worked, with some investors pointing out that many hedge funds lost money, including White Square Capital and Melvin Capital Management. Melvin Capital reportedly lost $6.8 billion in one month, suggesting that the plan worked.

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However, many firms and investors continued shorting these stocks as the price increased. As interest in the stocks dried up from retail investors, the share prices came crashing down, likely resulting in large profits for those shorting at the high stock prices.

While this fad for shorting stocks has since slowed, it is still a potential strategy for making money on stocks. Here are the most shorted stocks of December 2022.

Marathon Digital Holdings (NASDAQ: MARA)

Marathon Digital Holdings had a short interest of 42.1% with 48.9 million shares short as of mid-December. The stock started 2022 trading at $33.68 per share and ended the year at $3.42 due to the collapse of cryptocurrency. The company actively mines crypto and, as of December 2021, owns 8,115 bitcoins. The future of the company is contingent on the price of cryptocurrency. After the initial price decline, most crypto assets have stabilized in value, helping stall the price drop for MARA stock.

Upstart Holdings (NASDAQ: UPST)

Upstart Holdings is a cloud-based artificial intelligence lending company that offers personal loans to consumers to refinance high-interest debt. The company had a short interest of 38.52% with 27.14 million shares short. Its stock value at the beginning of 2022 was $153.62 and closed the year at $13.22. The outlook for 2023 is cloudy as the Federal Reserve is expected to continue to raise interest rates. This translates into higher rates for the loans that Upstart offers, which might not significantly improve borrowers’ current rates. As a result, refinancing could decline for the year and take Upstart down with it.

Beyond Meat (NASDAQ: BYND)

Beyond Meat stock was a popular investment when the stock debuted in 2019, spiking to $234.90 in July of that year. After a significant pullback, the stock rose again, reaching $194.95 in October 2020. Since then, however, the stock has trended lower. It started 2022 trading at $65.68 and ended the year at $12.31 per share.

There are 63.74 million shares outstanding, with 22.7 million shares short. The short interest for the stock is 43.12% as of December 2022. Analysts expect the stock to go down further in 2023, with a median estimated share price of $10.50 and some going as low as $5.

Carvana Co (NYSE: CVNA)

Toward the end of December, Carvana had a short interest of 80.12% with total short shares of 50.13 million. The company has made multiple missteps and had its ability to sell cars halted multiple times in several states. It’s also grappling with lawsuits that have been filed due to its poor handling of car sales. Bond prices for the company have fallen under $0.50, fueling default fears. The company started 2022 with a stock value of $234.38 and ended the year at $4.74.

Bed Bath & Beyond Inc. (NASDAQ: BBBY)

Bed Bath & Beyond finished 2022 with 57.14% of its float shorted and a total number of shares shorted of 37.48 million. The home goods retailer has suffered a series of downturns that eroded investor confidence in the company and turned it into a meme stock for a short period. Declining sales are the company’s most prominent issue, and it has warned that it may file for bankruptcy in early 2023. Its stock reached a high of $27.23 in March 2022 but closed at $2.51 at the end of the year.

Wayfair Inc. (NYSE: W)

Wayfair has seen 42.22% of its float shorted, with a total volume of short interest shares of 23.92 million. The company was hit by short sellers looking to gain from the weak holiday season sales forecast. Sales for the nine months ending September 30, 2022 were down about 13% year-over year, only giving shorts more reasons to believe the stock price will decrease. Its stock price started in 2022 at $191.11 and ended the year at $32.89 per share.

The Beauty Health Company (NASDAQ: SKIN)

The Beauty Health Company has had 39.3% of its shares floated and has a total short interest of 29.49 million shares. The driving reason behind the short selling of its stock is the fact that the company hasn’t been publicly traded for a long period. It lacks historical data for performance, and the stock market generally is unsure of how the business performs during broad economic troubles. The company’s stock price started in 2022 at $24.49 and dropped to a low of $9.10 at the end of the year.

Allogene Therapeutics, Inc. (NASDAQ: ALLO)

Allogene Therapeutics, Inc. has 33.84% of its short shares in float for a total of 30.53 million shares short overall. The company is undergoing short selling because, generally, investors feel it’s unable to turn a profit. In contrast, analysts think that the stock is a buy and that the company’s profitability will improve in 2023. Its stock started the year at $14.95 and ended at $6.29.

Silvergate Capital Corporation (NYSE: SI)

Silvergate Capital Corporation saw 48.53% of its float shorted for 15.11 million shares. The company is focused on the cryptocurrency industry and has crypto exchange FTX as one of its clients. The collapse of FTX has negatively affected the crypto industry, and investors are betting against Silvergate’s ability to retain its stock value. Its stock started the year at $150.88 and ended at $17.40.

Heron Therapeutics, Inc. (NASDAQ: HRTX)

Heron Therapeutics has seen 30.75% of its float shorted on short interest of 28.84 million shares. The company has four approved therapies that provide most of its income, but it has been experiencing heavy losses because its pain reliever Zynrelef has failed to make major headway in sales. Its stock price opened the year at $9.22 and ended at $2.50.

Bottom Line

Shorting stock can be a way to make money in the stock market. However, it is risky if you don’t know what you are doing or don’t pay close attention to the market. As a result, knowing the most shorted stocks is more important for experienced investors.

For others, choosing a less risky strategy is a smarter move. Q.ai takes the guesswork out of investing.

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