Short Sellers Increasingly Betting on 11 Stocks to Crash Soon

Short Sellers Increasingly Betting on 11 Stocks to Crash Soon

Short sellers are targeting 11 stocks in the S&P 1500, including Big Lots, Cutera, and Voya Financial, according to an analysis by Investor's Business Daily. Short interest, which measures the percentage of outstanding shares held by short sellers, is up slightly from the start of the year, with bears spotting opportunities in the market. Short sellers, who profit when a stock falls, control 18.5% or more of all the shares outstanding in these 11 stocks. Remarkably, short interest remains high despite some stocks already falling considerably this year. For instance, Big Lots, the discount retailer based in Ohio, has already dropped by 30.1% this year, yet more than 31% of the company's shares outstanding are controlled by shorts.

Short sellers are making big bets against asset manager Voya Financial and movie theater chain Cinemark Holdings, both of which are up strongly this year. More than 23% of Voya's shares outstanding and more than 21% of Cinemark's shares outstanding are controlled by shorts. However, shares of both companies are up 9% and 53%, respectively. In the case of Cutera, a maker of laser systems for aesthetic procedures, short sellers control more than 24% of the company's shares outstanding, although the shares have already fallen nearly 40% this year. Interestingly, the company is expected to return to profitability in 2024.

Short sellers' role is gaining attention again following a 15% drop in shares of mobile payments processing company Block on a short-seller's critical report. However, short interest is nowhere near where it was during the GameStop rally in 2021. Only 18.7% of GameStop's shares outstanding are being shorted, a fraction of where it was in 2021. Nonetheless, thanks to a slipping stock market and bank crisis, it looks like shorts are regaining some of their swagger.