5 stocks with unusually high short-term interest, is a squeeze possible?

With the broader market hitting new all-time highs, driven primarily by the technology sector and particularly semiconductor stocks fueled by the hype surrounding artificial intelligence, the spotlight is once again starting to shine on stocks with high short interest.

These companies, which face high levels of short interest, have been subject to intense scrutiny and volatility as investors and short sellers engage in a tug-of-war over their share prices. So, with investor confidence and speculation on the rise, let’s look at five of the most shorted stocks on the market today and why it might be time to learn how to short stocks.

Emerging participations NASDAQ: UPST

Upstart is a lending platform in the United States that uses AI technology to make credit decisions. It offers loans for various purposes and leverages advanced algorithms to evaluate creditworthiness beyond traditional factors.

The overwhelming bearish sentiment seems aligned with the market on UPST, as the stock is down more than 35% year to date and nearly 20% in the past month. UPST is one of the lowest-rated stocks, with a reduced rating based on nine analyst ratings. Short interest has remained strongly elevated despite a significant sell-off in recent months. As of February 15, 35.64% of the float was sold short, equating to nearly 26 million shares placed short. If momentum shifts higher, significant short interest could exacerbate the move.

Caravana NYSE:CVNA

Carvana is an online platform that operates primarily in the United States and focuses on automotive retail. The company facilitates the buying, selling and financing of vehicles through its website, offering customers a streamlined, digital car buying experience.

Thanks to its high short interest and recent gains, shares of the online automotive retailer have posted impressive gains recently. Year-to-date shares are up 46% and a whopping 770% from the previous year. Sentiment around CVNA is also extremely bearish, with recent insider selling, a consensus downgrade rating, and a price target of 43% downside. As of February 15, short interest in the stock was 16.51% or 33.3 million shares placed short.

C3.ai NYSE: AI

C3.ai focuses on enterprise AI software solutions. Its offerings range from predictive maintenance, fraud detection and supply chain optimization and cater to various industries.

Analysts are not as bearish on the name as they are on the previous two, with an analyst consensus rating based on ten analyst ratings. However, bearish sentiment is present, with insiders selling shares during the previous quarter, an increase in short-term interest, and the name being on the list of lowest-rated stocks. As of Feb. 15, 28.81% of AI’s float was sold short, totaling 34.5 million shares.

Arbor Real Estate Trust NYSE: ABR

Arbor Realty is a real estate investment trust based in Uniondale, New York. Led by President and CEO Ivan Kaufman, the company invests in various structured finance assets in the U.S. real estate market. Focusing on the multifamily, single-family rental and commercial real estate sectors, Arbor manages a portfolio in excess of $42 billion and originates more than $16 billion in loans annually.

Unlike the stocks above, ABR has positive sentiment despite very high short interest rates. The analyst consensus rating for ABR is maintained and the consensus price target is $15.67, which sees an upside of nearly 22% for the stock. However, as of February 15, short interest had increased 8.56% from the previous month to 36.8%, making ABR one of the highest shorted stocks. As of Feb. 15, 69.3 million shares had been sold short.

ImmunityBio New York Stock Exchange: IBRX

ImmunityBio, Inc. is a clinical-stage biotechnology company dedicated to advancing therapies and vaccines to strengthen the immune system against cancer and infectious diseases. The company is committed to improving patient outcomes through innovative immunotherapy and cell therapy platforms, promoting robust and long-lasting immune responses.

IBRX, like ABR, is one of the most shorted stocks on the NYSE, with a short float of 36.07% as of February 15. Compared to the previous month, that figure increased by 7.31%, with the total number of shares sold short now at a staggering 43.9 million. With only one analyst rating, the stock has a hold rating and a price target of over 21% downside.

Before you consider Upstart, you’ll want to hear this.

MarketBeat tracks Wall Street’s highest-rated and best-performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market takes hold… and Upstart wasn’t on the list.

While Upstart currently has a “Reduce” rating among analysts, top-rated analysts believe these five stocks are better buys.

View the five stocks here