Put Up Your Dukes: 3 Stocks Battling Short Sellers Now

Investors sitting on the sidelines watching stocks battling short sellers face a conundrum. On one hand, short reports include in-depth research, data and facts to support a bearish thesis, often centering on overvaluation or outright fraud. Just look to Hindenburg Research as one such example of short sellers usually doing it “right.” In these cases, short sellers perform a vital market function by helping to keep valuation aligned with reality.

Of course, this level of quality due diligence isn’t always the case. Often, short sellers use the mechanisms as a targeted tool to suppress an otherwise solid stock, particularly if the company’s per-share pricing is already low or if there’s some ungrounded controversy surrounding the stock. When this happens, management is forced to address the issue and focus their efforts on battling the short sellers rather than running day-to-day operations — almost creating a self-fulfilling prophecy if their attention on core operational efforts drops too drastically.

These stocks battling short sellers are in such a position — quality stocks facing undue and unwarranted short selling pressure — but their inherent strength may also set the stage for a short squeeze as they duke it out.

Tesla (TSLA)

Tesla (NASDAQ:TSLA), alongside Elon Musk, is a classic example of stocks battling short sellers. As Tesla reached an ascendant status throughout the pandemic era, shorts kept piling onto Tesla stock — only to get burned repeatedly. Even as EV sales wane, more due to macro factors than anything else, shorts consistently lose billions of dollars betting against Tesla.

Musk always made his feelings about unfair and unwarranted short attention known, but today, he’s going to war.

He took to X earlier this month to affirm his position that, as Tesla’s AI and robotics initiatives proceed, “anyone still holding a short position will be obliterated.” In the post, he also called out Bill Gates for his (in)famous short position against Tesla, even as Gates touts philanthropic efforts to address climate change in a now-famous text exchange from 2022.

Backing up Musk, Future Fund managing partner Gary Black summed up the anti-short thesis well, citing rapid EV adoption rates, autonomous vehicle valuation and the company’s forays into affordability — all of which are key weapons in Tesla’s battle against short sellers.

Trump Media & Technology Group (DJT)

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Is it any surprise that, among all stocks battling short sellers, Trump Media & Technology Group (NASDAQ:DJT) is surging following the former president’s attempted assassination? While the stock itself is undeniably a stinker, with terrible user rates and even worse advertiser interest, as I’ve covered before, the stock never closely followed fundamentals and instead became a proxy for broader Trump support and positive sentiment.

That trend accelerated this week as shares closed the first day’s trading session more than 30% higher following the attempted assassination, equating to a whopping $7.7 billion market cap. That fleshes out to an astronomical 1,342 price-to-sales ratio and a 26x price-to-book ratio. To that end, DJT stock short interest still hovers north of 11%.

In any other world, this stock would be ripe for short-selling profit on the way down. However, as Trump rapidly widens his lead in the polls and national betting markets all but assure a Trump victory, DJT stock will likely continue reigning supreme in the battle against short sellers.

Palantir (PLTR)

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As with Tesla, bets against Palantir (NYSE:PLTR) consistently fail, even if last year’s short interest suppressed the stock in the low-teen territory. However, tides are shifting in Palantir’s favor as shares surge toward $30 and remain consistently above $25, perhaps as fallout from CEO Alex Karp’s Musk-esque battle against short sellers.

Last March, Karp said that he “love[s] burning the short-sellers” who, in his mind, “just love pulling down great American companies so that they can pay for their coke.” While that bit of hyperbole made headlines, Karp and the team were rapidly gaining ground behind the scenes and battling one of the shorts’ greatest arguments against Palantir: an over-dependence on government contracting and too few corporate contracts.

Today, Palantir counts Tampa General Hospital, United Airlines (NASDAQ:UAL), AARP and even Wendy’s (NASDAQ:WEN) among its growing corporate client list — cementing the company’s currently-dominant position in the battle against short sellers.

On the date of publication, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.