Analyzing Seven Low Float Stocks With Elevated Short Interest: Short Squeeze Opportunities?

The appeal of penny stocks has evolved significantly, with many investors now zeroing in on opportunities where short-covering could trigger explosive price movements. When a company has limited tradable shares combined with a substantial percentage of shares sold short, the conditions for a potential squeeze emerge—particularly if positive catalysts arrive to force short positions to exit.

This approach isn’t foolproof, though. Market professionals sometimes have good reason to be bearish. Here’s an examination of seven candidates that fit the low float stocks profile worth monitoring:

Allogene Therapeutics (ALLO): Biotech With Recent Momentum

Allogene Therapeutics operates in the competitive cell therapy space, focusing on cancer treatments. The company’s float comprises roughly 67.4% of outstanding shares, with approximately 30% shorted. Despite a year-to-date decline exceeding 50%, the stock recently experienced a brief rally triggered by positive earnings developments and the presentation of preclinical pipeline data at a major medical conference.

For biotech investors comfortable with research-stage companies, the combination of encouraging recent news and substantial short exposure creates an interesting risk-reward scenario. A meaningful therapeutic breakthrough could provide significant upside, though execution risks remain.

BioXcel Therapeutics (BTAI): AI-Focused Biotech Under Pressure

BioXcel markets its neuroscience platform with emphasis on artificial intelligence applications. Approximately 69.8% of shares trade freely, with roughly 28.45% held short. The company has faced recent headwinds, including business restructuring uncertainty and a November pipeline setback that triggered a 23.4% single-day decline.

While the AI narrative initially attracted attention, recent operational challenges have favored the bearish case. Prospective buyers should carefully evaluate whether current sentiment properly reflects the company’s actual prospects before committing capital.

Torrid Holdings (CURV): Apparel Retailer Showing Strength

The plus-size fashion retailer has regained prominence among heavily shorted low float stocks. Only 9.16% of shares freely trade, with 23.3% of float sold short. However, price action tells an important story: shares have tripled from approximately $1.30 to $3.70 since September.

This rapid ascent suggests optimism about the company’s resilience amid inflation concerns may already be priced in. Waiting for a meaningful pullback presents a more prudent entry point before establishing a squeeze-oriented position.

Joann (JOAN): Stretched Retail Story

With 28% public float and 21.65% shorted, Joann appears structurally primed for a squeeze. The fabric retailer’s existence remains precarious, however. While Chapter 11 bankruptcy avoidance would spark a sharp rally, deteriorating fundamentals and an approaching earnings report (December 4) suggest downside risks outweigh upside potential near-term.

ProKidney (PROK): SPAC-Derived Cell Therapy Play

ProKidney entered public markets through a SPAC sponsored by notable promoter Chamath Palihapitiya. The cell therapy developer now trades 80% below its SPAC launch price. Short interest remains elevated at 23.4% of float despite the decline.

The concerning element: insider selling. Palihapitiya recently unloaded approximately 7.25 million shares. When insiders liquidate after short interest builds, it typically signals weakness. Avoiding this name as a squeeze candidate makes sense.

SiriusXM Holdings (SIRI): Satellite Radio With Reemergent Squeeze Potential

SiriusXM has become a repeat short-squeeze victim this year. Currently, 27.5% of float remains shorted. Hedge funds initially squeezed after attempting to arbitrage the price difference between SIRI and tracking stock Liberty SiriusXM Group (LSXMA).

These arbitrageurs have reestablished positions following parent Liberty Media’s planned spin-off announcement. This dynamic has recreated conditions where retail traders might successfully pressure the professional short sellers again, though complexity around deal spreads warrants caution.

NuScale Power (SMR): Nuclear Energy Play Facing Skepticism

NuScale, operating in the small modular reactor space, benefits from tailwinds around clean energy adoption. Yet only 63.2% of shares float freely, with 21.4% shorted relative to available float. An influential short-seller even published critical allegations.

The company possesses compelling long-term potential, but near-term prudence suggests waiting for management to address the credibility challenges before treating this as a squeeze opportunity.

The Bottom Line

Low float stocks with significant short interest create theoretical squeeze conditions, yet execution quality, sector dynamics, and fundamental momentum ultimately determine which candidates deliver actual gains. Thorough research remains essential before deploying capital.