3 Short-Squeeze Stocks Set to Spike

Short-squeeze stocks are back on many investors’ radars as meme stock mania appears to be in full swing once again. The experts who thought the trend was over are in for a rude surprise. The prominent recent moves of stocks like Bed, Bath and Beyond (NASDAQ:BBBY) illustrate meme stocks are still a force.

A short squeeze is when a heavily shorted stock or other asset rises sharply, forcing short-sellers to buy back the shares to avoid heavy losses. This buying pressure can cause the asset price to rise, leading to even more short covering and a short squeeze. While short-squeeze stocks come in all stripes, they are most commonly seen in companies with high short interest levels.

When a short squeeze happens, it can boost the company’s share price in question. However, it is important to note that short squeezes are often followed by a period of consolidation or even a sharp sell-off as the short sellers take their profits and move on. As such, investors need to be aware of the risks involved before buying in short-squeeze stocks to enthusiastically.

With that in mind, let’s look at three prominent short-squeeze stocks with high short interest.

EVgo (EVGO)

One of the more prominent plays to emerge ub the EV space recently is EVgo (NASDAQ:EVGO), a company that debuted via the SPAC merger. Shares went hyperbolic on debut, opening at $15 a pop. However, things have quieted since then, and the bears circling the stock.

Though EVgo is growing fast, the company is still rather young. It’ll need more time to get to profitability. Keeping this in mind, this EV play is risky, but that comes with the territory when discussing short-squeeze stocks to buy.

Warby Parker (WRBY)

Warby Parker (NYSE:WRBY) sells a variety of glasses and sunglasses. The company is considered one of the world’s most innovative direct-to-consumer brands. It clearly has a proven track record for success.

However, the issue bears have are the losses, which are mounting despite high sales growth. In its most recent quarterly earnings, investors came to know revenues came in at $149.62 million, a double-digit rise from the year-ago period.

However, losses during the same period losses jumped 212.08%. Consequently, short interest in Warby Parker has grown substantially. And with the stock still trading well below its all-time highs, there’s potential for further upside. So, for those looking for short-squeeze stocks, Warby Parker is worth considering.

Electrameccanica Vehicles Corp. (SOLO)

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ElectraMeccanica (NASDAQ:SOLO) is a  single-person electric vehicle that can go up to 100 miles on a charge. It plugs into any standard outlet to recharge. The company is also expanding its product line with a Cargo version of the SOLO.

The company reported top-line growth of 417.65%, with total revenue reaching $1.55 million. However, Electrameccanica also reported a net loss of $20.3 million for the quarter.

While the loss is significant, it is important to note that Electrameccanica is a young company that is still in the investment phase. The company is encouraged by strong top-line growth and remains committed to its long-term goal of becoming a profitable and sustainable business.

However, until it happens, given the size of its losses, short interest will remain high, ensuring its place among short-squeeze stocks.

On the publication date, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.