The Globe and Mail
Stephen Donovan, MBA
Published February 9, 2021
U.S.-listed stocks that could see their share price rise from a short squeeze.
The screen
Short-selling has been brought to the forefront of financial markets in recent weeks, with companies such as GameStop Corp. seeing their share price increase by more than 2,000 per cent in mere weeks. The rapid rise and fall in the share price of GameStop was mostly because of a short squeeze. This occurs when investors who are shorting a stock (betting that the share price will decline) are forced by rising prices to cover their short positions prematurely by repurchasing stock, thus driving the share price up even higher. While the elevated prices are typically not sustainable (as demonstrated by the continued retreat in the share price of GameStop on Tuesday), these phenomena do offer investors with a high risk tolerance the opportunity to participate in market rallies. Today, we screen for companies that are poised for a short squeeze.