Investors betting against electric-vehicle stocks take note: Five of 25 stocks that short-selling research firm S3 Partners identified this month as being at risk of a short squeeze are in the EV business.
Short sellers fear short squeezes. To put on a short, investors borrow shares. If the stock falls, the short seller buys them back at the lower price and returns them to the lender, pocketing the difference. But if good news lifts the price, the shorts may be forced to close their positions—squeezed—sending shares higher.
One of the companies on the list was EV maker Canoo GOEV –4.94% . But on July 12, its stock soared more than 100% after Canoo announced a deal to sell electric delivery vans to Walmart WMT –0.26% . A few days later, Canoo said the military would try out its EVs, and its shares jumped 29%. Four other EV stocks also made S3’s list: Lordstown Motors RIDE –6.67% , Faraday Future Intelligent Electric FFIE –23.75% , Fisker FSR –5.29% , and Lucid .