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Best Short Squeeze Stocks to Buy Right Now

The dramatic price rise of Gamestop and AMC in early 2021 highlighted the power that retail investors can exert. These ‘short squeezes’ force short sellers to close out their positions – which adds large amounts of upwards pressure on price and often results in huge returns for people who hold the stock.

In this guide, we’ll explore the Best Short Squeeze Stocks to Buy Right Now, discussing the top stocks in the market and showing you where you can invest in them today – with no commissions!

Key Points on the Best Short Squeeze Stocks to Buy Right Now

  • Short squeeze stocks are stocks with a high percentage of the float being ‘shorted’ by institutional investors.
  • If one of these stocks experiences an unexpected price rise, it can cause short sellers to buy shares to close out their position, leading to significant price increases.
  • There are many stocks on the market right now with high short squeeze potential, which can be narrowed down by looking at the share price, short interest, and social media hype.
  • If you’re looking to buy short squeeze stocks, we recommend using eToro due to the platform’s 0% commission structure and extensive regulatory oversight.

68% of retail investor accounts lose money when trading CFDs with this provider.

Best Short Squeeze Stocks List

If you’re looking for the best short squeeze stocks today, then look no further. The list below presents the top options in the market, with the following section examining each of these one by one.

  1. Lemonade (LMND) – Overall Best Short Squeeze Stock
  2. Heron Therapeutics (HRTX) – Biotech Company with Great Potential
  3. Tattooed Chef (TTCF) – Best Vegan Stock with Short Squeeze Potential
  4. Cortexyme (CRTX) – Top Short Squeeze Stock in Pharmaceutical Sector
  5. Workhorse Group (WKHS) – Innovative EV Stock for Short Squeeze in 2022
  6. Sundial Growers (SNDL) – Best Cannabis Stock with Short Squeeze Potential
  7. iRobot Corp (IRBT) – Short Squeeze Stock with Great Financials
  8. Gogo Inc (GOGO) – Best Short Squeeze Stock in the Travel Sector

You can buy these short squeeze stocks using our recommended broker eToro, which doesn’t charge any commission!

A Closer Look at the Best Short Squeeze Stocks to Buy Today

For those interested in stock trading UK, short squeeze stocks represent a way to potentially make market-beating returns. Let’s explore some of the best short squeeze stocks on the market right now to ensure you’ve got a thorough understanding of your options.

1. Lemonade (LMND) – Overall Best Short Squeeze Stock

Our number one pick when it comes to short squeeze stocks is Lemonade. Lemonade operates within the scope of the insurance industry and provides cover for renters, homeowners, cars, pets, along with life insurance. The company has a strong foothold in the US and has customers in Germany and the Netherlands. At the time of writing, Lemonade has over 1 million clients – over 55% more than last year.

LMND share price chart

According to MarketWatch, Lemonade has a short interest of over 14.6m – which is over 38% of the float shorted. This is a very high ratio for a listed company and highlights how many investors have short positions in Lemonade. However, Lemonade does have strong prospects, primarily since the company relies heavily on AI. Right now, Lemonade’s loss ratio on many of its products is relatively high; however, as the AI ‘learns’ and improves, this ratio should fall. Assuming this occurs, Lemonade’s bottom line should also improve – which makes it ripe for a short squeeze in the future.

68% of retail investor accounts lose money when trading CFDs with this provider.

2. Heron Therapeutics (HRTX) – Biotech Company with Great Potential

Heron Therapeutics is a biotechnology company that develops and markets treatments for patients suffering from pain or cancer. The company offers various treatments, ranging from extended-release injections to short-acting pharmacological agents. The company’s shares are trading at around $9.89 at the time of writing, which is down drastically since the turn of the year. However, although there is significant short interest in this stock, there are rays of hope.

heron therapeutics price chart

Firstly, one of the company’s products, called Zynrelef, received approval from the FDA to be used in various new cases. This is a massive boost for Heron Therapeutics, as this drug constitutes a significant driver of revenue. Furthermore, revenues are up, and losses are down slightly since last year, which is positive. Finally, the impact of the COVID-19 pandemic has meant that fewer patients are being treated with cancer and less demand for Heron Therapeutics’ products. As the threat of COVID-19 subsides, the focus should shift to these patients – leading to a greater need for the company’s drugs.

68% of retail investor accounts lose money when trading CFDs with this provider.

3. Tattooed Chef (TTCF) – Best Vegan Stock with Short Squeeze Potential

Another of the best shares to buy with short squeeze potential is Tattooed Chef. Tattooed Chef is looking to capitalise on the demand for vegan products by supplying plant-based frozen food items to retailers across the US. The company’s shares peaked at $27.78 in January 2021, although they have dropped over 43% since that point. Much of this drop can be attributed to supply chain issues, which have resulted in 33.80% of the company’s shares being shorted by investors.

tattooed chef price chart

However, the company is looking strong in other areas, giving it high short squeeze potential. Firstly, revenue increased by over 43% in Q3 2021 compared to the previous year, which is impressive considering the supply issues. Sales rose for both branded and private label products, although Tattooed Chef did still make a loss this quarter, equating to an EPS of -$0.10. Overall, these supply chain issues won’t last forever, meaning that any small jump in price could lead to a snowball effect of short-sellers jumping ship – which is excellent news for buyers!

68% of retail investor accounts lose money when trading CFDs with this provider.

4. Cortexyme Inc (CRTX) – Top Short Squeeze Stock in Pharmaceutical Sector

If you’re looking to buy shares in short squeeze stocks, then Cortexyme is worth considering. Cortexyme is a clinical-stage biopharmaceutical company that is in the process of developing treatments for various degenerative diseases, including Alzheimer’s. At present, over 54% of shares are shorted due to poor results from a recent trial for one of the company’s most promising drugs, which looked likely to be the first one that could bring in revenue for Cortexyme.

cortexyme price chart

However, there is still hope for this company. Cortexyme’s executives plan to conduct another clinical trial with this drug, using a more targeted focus group. The hope is that results in this trial will be more promising, which should give investors hope. Due to Cortexyme’s small market cap, valued at $364m at the time of writing, any income-generating drug should prompt significant share price increases. As such, all eyes will be on the next update from execs in early 2022 – which could provide scope for the start of a short squeeze.

68% of retail investor accounts lose money when trading CFDs with this provider.

5. Workhorse Group (WKHS) – Innovative EV Stock for Short Squeeze in 2022

Workhorse Group is a Cincinnati-based electric vehicle (EV) manufacturer that focuses on delivery and utility vehicles. Vehicles developed by the company include pickup trucks, vans, and even drones. The company’s shares have had a rough time this year, as Workhorse had to recall the C1000 vans that it had delivered due to testing requirements. As this vehicle was the only one that could generate revenue for Workhorse, the recall has meant the company is producing no income.

workhorse price chart

Ultimately, this has translated to over 29% of shares being shorted at the time of writing. However, as noted by Forbes, the $1.2trn infrastructure bill launched by the Biden administration has pledged over $7bn to expand the network of EV chargers in the US – which will likely lead to increased demand for Workhorse vehicles. Furthermore, Workhorse has strong backing from Reddit, which helped the likes of Gamestop and AMC reach ‘meme stock’ status. These two factors could combine to provide upward momentum in 2022 – making Workhorse one of the best short squeeze stocks to consider.

68% of retail investor accounts lose money when trading CFDs with this provider.

6. Sundial Growers (SNDL) – Best Cannabis Stock with Short Squeeze Potential

If you’re looking for the best cannabis stocks with short squeeze potential, then Sundial Growers certainly makes the list. This Canada-based company grows and sells cannabis, although it also has an investment division for acquiring smaller companies. From the outside, things look rosy for Sundial Growers, as the price per gram of cannabis has increased by over 20% since last year. Yields are also at record levels, which should give hope to investors.

Sundial price chart

However, the fact of the matter is that Sundial has over 29% of its float shorted at the time of writing. Much of this is because Sundial cannot sell its products in the US, severely limiting its target market. This has prompted investors to look towards US-based cannabis companies, as they likely have better long-term prospects. Notably, Sundial is purchasing a huge Canadian liquor chain, which will significantly increase the number of stores Sundial has. Ultimately, although the lack of US sales will limit Sundial, the prospects are still there for this to be one of the best short squeeze stocks for 2022.

68% of retail investor accounts lose money when trading CFDs with this provider.

7. iRobot Corp (IRBT) – Short Squeeze Stock with Great Financials

iRobot Corp is one of the short squeeze stocks that benefitted from the Reddit craze in early 2021, with shares increasing by over 150% in a matter of weeks. The company designs and manufactures consumer robots, such as vacuum cleaners, mops, and similar products. Furthermore, iRobot was in the process of developing a robotic lawnmower, although the project has been postponed since 2020. The lack of movement on this front is worrying, leading to 26.42% of shares being shorted at the time of writing.

irobot price chart

Despite this, there is hope for 2022. According to Goldstein Research, the global autonomous floor cleaning robots market is expected to grow at a compound annual growth rate of 17% between now and 2030. Furthermore, iRobot had some impressive Q3 2021 results, generating a profit of $57.2m. This equates to an EPS figure of $2.09, which is even more remarkable considering the supply chain issues the company has been experiencing. Overall, although the share price doesn’t look pretty, iRobot certainly has the potential to be one of the best short squeeze stocks for the months ahead.

68% of retail investor accounts lose money when trading CFDs with this provider.

8. Gogo Inc (GOGO) – Best Short Squeeze Stock in the Travel Sector

Rounding off our list of the top short squeeze stocks is Gogo Inc. Gogo is an in-flight broadband provider which has reportedly seen over 2500 of its products installed on commercial aircraft and 6600 on business aircraft. As expected, Gogo’s shares have been affected by the Coronavirus pandemic lockdowns, which has decreased demand for air travel. Although over 36% of Gogo’s float is currently shorted, there are signs to be upbeat about the company.

Gogo inc price chart

Firstly, Q3 results were impressive, with revenue up 31% from last year. The number of aircraft that Gogo’s products were installed on also increased, leading to a profit of $10.95m. These solid results prompted management to raise its guidance for revenue and earnings, which is a hugely positive sign. Finally, as we head into 2022, the hope is that business and leisure travel will continue to recover – which will translate into a greater need for Gogo’s in-flight WiFi services!

68% of retail investor accounts lose money when trading CFDs with this provider.

What Are Short Squeeze Stocks?

If you’re interested in equity trading UK, you’ll likely have heard of short squeeze stocks. Put simply, these stocks are heavily shorted by institutional investors (such as hedge funds) yet experience upwards price momentum. As short sellers ‘borrow’ shares to sell them and then hope the price goes down so they can return them at a lower price, any upwards price movement is a bad thing.

short squeeze stocks

These short-sellers panic and buy shares at a higher price to close out their short position and limit their losses. The act of buying shares then causes retail investors and other stock market participants to purchase shares – thereby increasing the price. This ‘perfect storm’ tends to cause a stock’s price to grow rapidly, often by over 100% in a matter of days – much like we saw with GME and AMC Entertainment.

How do Short Squeeze Stocks Work?

Leading on from the previous section, let’s dive a little deeper into the mechanics behind these stocks. When a stock experiences a short squeeze, the following things tend to happen:

  • A stock will have a relatively high number of investors with a short position in it
  • An unexpected increase in the stock price will occur – perhaps due to news or social media ‘hype.’
  • The short sellers will panic and buy shares to close out their position
  • Other people will see institutional investors buying shares and assume the stock will keep rising, so they also buy shares.
  • All of this upwards momentum causes the share price to increase rapidly.

Ultimately, this upwards momentum cannot last forever, so the stock price will ‘reset’ at some point. Thus, if you are looking to invest in short squeeze stocks, it’s vital to time your exit well so that you don’t eradicate most of (if not all of) the gains that have been made.

How to Find Short Squeeze Stocks

Now that you understand what short squeeze stocks are, let’s discuss the process of choosing between them. Found below are three of the main factors to consider when researching stocks with high short interest:

Share Price

One of the fundamental elements to consider is the company’s share price. Most of these stocks will have a low market cap and will be trading at a low price. As such, any sharp increase in the stock price will typically generate huge returns in a short space of time. Thus, it’s wise to look for stocks with these metrics, as they represent the best chance of success during a short squeeze.

Short Interest

Understandably, the percentage of investors with a short position in the stock is also crucial to consider. The number of shares sold short compared to the total float amount is often referred to as the short interest ratio and highlights the sentiment of institutional investors. Anything above 20% is considered high, with some stocks having a short interest of 50% or more! The higher the interest, the more intense the short squeeze would be if it were to occur.

short interest stock stats

Social Media Backing

Finally, the stock’s social media backing is essential to consider. Meme stocks like GME and AMC saw huge share price increases thanks to sites such as Reddit, as retail investors bought shares to force short sellers to close their positions. This highlighted the power of casual investors and forced many to take note. So, if your chosen stock is frequently mentioned on WallStreetBets (or other subreddits), then there’s always a chance it could benefit from the attention down the line.

Best Brokers to Buy Short Squeeze Stocks

If you’re looking to buy short squeeze stocks, you’ll need a suitable trading platform to make your investment. Found below are two of the best share dealing accounts for UK-based investors looking to buy these shares:

1. eToro – Overall Best Broker to Buy Short Squeeze Stocks

eToro logo

Our top pick when it comes to brokers is eToro. As you may already know, eToro is one of the largest online brokers in the world, with over 23 million users at the time of writing. Much of eToro’s reputation is derived from the platform’s safety, as it is regulated by the FCA, ASIC, and CySEC. What’s more, as eToro is covered under the FSCS, traders are insured up to a total of £85,000 in the unlikely event that eToro goes bust.

When trading stocks, eToro allows users to invest with 0% commission, which contrasts with other brokers that charge a fee when you place a trade. eToro also allows users to invest in real stocks or stock CFDs – with the latter allowing you to employ up to 1:5 leverage. In terms of product selection, eToro has around 2000 stocks to trade on various stock exchanges, along with ETFs, commodities, currencies, and even cryptocurrency.

etoro stock trading

The minimum deposit at eToro is only $50 (£37), which can be made via credit/debit card, bank transfer, or various e-wallets. Deposits are free to make, although there is a 0.5% conversion fee if you deposit in a non-USD currency. Finally, eToro even offers a free demo account for all users, allowing you to practice trading with paper money before moving to the real thing.

Pros

  • 0% commission broker
  • Huge range of stocks
  • FCA regulated
  • Accepts PayPal deposits
  • Up to 1:5 leverage

Cons

  • A small inactivity fee applies

68% of retail investor accounts lose money when trading CFDs with this provider.

2. Capital.com – Reputable CFD Broker with 0% Commission Structure

Capital.com

If you’re looking for an alternative to eToro, we’d also recommend checking out Capital.com. Founded in 2016, Capital.com has grown exponentially over the last five years and is now regulated by the FCA, ASIC, CySEC, and the NBRB. Furthermore, with around 2 million clients and trading volumes above $88bn, Capital.com is ideal for investors looking for a platform with great credibility.

Like eToro, Capital.com offers 0% commission trading on a vast range of stock CFDs. The platform provides around 3600 stocks to trade, along with a wide array of currency pairs, stock indices, ETFs, and commodities. Capital.com has seven stock markets available for UK-based traders to invest in, with leverage of up to 1:5 for retail investors.

capital.com stock trading

Capital.com charges no non-trading fees and offers a web, desktop, and mobile trading platform – all of which synchronise with one another. The mobile app is exceptionally user-friendly, offering many features and AI-powered analysis. Finally, Capital.com has a massive library of educational, featuring videos, tutorials, and articles dedicated to improving the results of beginners.

Pros

  • 0% commission broker
  • A tremendous amount of educational resources
  • User-friendly mobile app
  • Free demo account

Cons

  • Primarily focuses on CFDs

68% of retail investor accounts lose money when trading CFDs with this provider.

How to Buy Short Squeeze Stocks

Before we round off this guide, let’s discuss the investment process. By following the four quick steps below, you’ll be able to invest in short squeeze stocks with eToro – one of the best stock brokers for retail traders.

1 – Create an eToro Account

Head over to eToro’s homepage and click the ‘Join Now’ button. On the page that appears, enter a valid email address and choose a username and a password to create your account.

eToro sign up

68% of retail investor accounts lose money when trading CFDs with this provider.

2 – Verify your Account

As an FCA-regulated broker, eToro requires new users to verify themselves. To do so, click the ‘Complete Profile’ button on your dashboard and enter the details required for the KYC checks. You’ll also have to upload proof of ID (copy of passport or driver’s license) and proof of address (copy of bank statement or utility bill).

3 – Make a Deposit

New users must deposit a minimum of $50 (£37), which will come with a 0.5% conversion fee if you deposit in GBP. In terms of deposit methods, eToro accepts the following:

  • Credit card
  • Debit card
  • Bank transfer
  • PayPal
  • Skrill
  • Neteller
  • Klarna
  • Trustly

4 – Buy Short Squeeze Stocks

Type in the name or ticker symbol of the stock you’d like to trade into the search bar and click ‘Trade’ next to the appropriate option. In the order box that appears, enter your desired position size (minimum of $10), check that everything is correct, and click ‘Open Trade’.

buy short squeeze stocks eToro

Best Short Squeeze Stocks to Buy Right Now – Conclusion

In conclusion, this article has explored the best short squeeze stocks in detail, highlighting which companies have the most significant potential in the market. By reviewing the list presented earlier, you’ll gain an understanding of which stocks could experience a short squeeze in 2022 – and generate huge returns for shareholders.

If you’d like to buy any of these short squeeze stocks, we recommend using eToro. Thanks to the platform’s 0% commission structure and minimum deposit of only $50, eToro is ideal for anyone looking to trade stocks cost-effectively.

68% of retail investor accounts lose money when trading CFDs with this provider.

Frequently Asked Questions on Short Squeeze Stocks

What are short squeeze stocks?

What happens to a stock after a short squeeze?

Is a short squeeze good or bad?

Are short squeeze stocks risky?

What stocks are being short squeezed right now?

Connor Brooke author check sign Pro Investor

Connor is a Scottish financial expert, specialising in wealth management and equity investing. Based in Glasgow, Connor writes full-time for a wide selection of financial websites, whilst also providing startup consulting to small businesses. Holding a Bachelor’s degree in Finance, and a Master’s degree in Investment Fund Management, Connor has extensive knowledge in the investing space, and has also written two theses on mutual funds and the UK market.

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