Traders targeting heavily shorted stocks are looking to play one of two sides: betting on a company's downfall or hunting for a short squeeze.
Here is a breakdown of why these stocks attract so much attention and a look at the current market landscape.
- LCID stock is heavily shorted. See the chart and price action here.
Why Do Stocks Get Heavily Shorted?
Investors and traders often maintain a high level of short interest whenever a stock is overvalued.
They are betting that the company faces significant risks—such as poor earnings, a failing business model or industry headwinds—that will eventually drive the stock price down.
The Two Sides of the Trade
- The Bear Case: Short sellers rely on meticulous research to identify companies they believe are ticking time bombs.
- The Bull Case: On the flip side, retail traders often view high short interest as a coiled spring. If the stock price starts to rise, it can trigger a short squeeze.
The Mechanics of a Short Squeeze
A short squeeze is a volatile feedback loop that can lead to explosive gains in a very short window.
It begins when a stock's price rises unexpectedly, forcing short sellers to frantically buy shares back to cover their positions.
The forced buying creates a sudden spike in demand, which pushes the price even higher, trapping more short sellers in the feedback loop.
The volatility of a short squeeze can lead to returns that far exceed typical stock movements in a very short time frame.
Top 10 Most Shorted Stocks
Here are the most heavily shorted stocks (with market caps above $2 billion and free floats above 5 million) as of Feb.2, according to data from Benzinga Pro.
In the table below, stocks are ranked by short interest — the total number of shares sold short and not yet covered, expressed as a percentage of shares available for public trading.
| COMPANY NAME & TICKER | SHORT INTEREST (%) [Feb. 2, 2026] |
| Choice Hotels International, Inc. (NYSE:CHH) | 56.33% |
| Lucid Group, Inc. (NASDAQ:LCID) | 54.45% |
| Avis Budget Group, Inc. (NASDAQ:CAR) | 52.38% |
| Under Armour, Inc. (NYSE:UAA) | 41.22% |
| Hims & Hers Health, Inc. (NYSE:HIMS) | 36.46% |
| ImmunityBio, Inc. (NASDAQ:IBRX) | 36.46% |
| Kohl's Corp. (NYSE:KSS) | 36.39% |
| MARA Holdings, Inc. (NASDAQ:MARA) | 36.21% |
| TransMedics Group, Inc. (NASDAQ:TMDX) | 36.14% |
| Medical Properties Trust, Inc. (NYSE:MPT) (NYSE:MPW) | 36.02% |
Reminders:
- Highly shorted stocks are battlegrounds where negative fundamentals meet speculative trading.
- Short squeezes can deliver huge, fast gains, but at very high risk and volatility.
- Monitoring the short interest leaderboard can help identify which stocks might be the next short squeeze, but timing such trades remains extremely challenging.
- Always conduct due diligence, as the volatility often reflects deep underlying risks and business uncertainty.
Photo: Shutterstock
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