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3 Heavily Shorted Stocks With Squeeze Potential

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The intense magnitude of 2021’s biggest short squeezes has attracted much interest from retail traders on the subject. There will almost certainly be more fireworks in 2022, but from where they will be launched is anyone’s guess.

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If there was a perfect formula to predict stocks that are prone to a short squeeze, we’d all be on yachts. Like any investment strategy, capturing an unusually big gain requires some homework and a stroke of good fortune.

Identifying good short squeeze candidates starts with finding companies that have a high short float percentage. This means short sellers own a large portion of the publicly available share count. Low float stocks are sometimes ideal since they are harder to come by and can therefore experience huge run-ups.

From there, the short squeeze is often ignited by a major news catalyst, heavy social media interest, immense options activity, or some combination thereof. These are hard to foretell.

But focusing on our initial criteria of a high short float, here are three stocks that if provided the right accelerant, could produce some epic squeezes. 

What Could Cause an Allbirds Short Squeeze?

Allbirds (NASDAQ: BIRD) has all the markings of a short squeeze candidate despite its limited tenure in the public market. The 25 million share float represents less than 20% of the shares outstanding which checks the low float box. Then there’s the 45.5% short float percentage which means nearly half of the available shares are in the hands of short sellers. A short ratio of 3.8 also points to a potential lasting squeeze because it means it would take almost 4 days for shorts to cover their position based on the stock’s normal trading volume.

Shares of the eco-friendly footwear and apparel maker flew above $30 on the IPO day but have been grounded by supply chain disruptions and the latest pandemic setback. They are sliding back toward the $13 level which if breached would mark a new low. Not even a January 6th upgrade at Morgan Stanley could stem the decline.

What could get Allbirds’ wings flapping again? Supply chain improvements and diminished Omicron concerns would help, but more is needed. The company will need to impress when it reports Q4 and full year results next month. Sales are expected to have soared 24% in 2021 but a better-than-expected holiday quarter could spark a reversal.

The secret weapon here, though, may by Allbirds’ ESG-friendly nature which is derived from its use of eucalyptus trees and sugarcane to make sneakers and clothing. If social media and sustainable investing proponents get behind this stock, given the short selling data, Allbirds could fly.

Will Bed Bath & Beyond Stock Squeeze Again?

Bed Bath & Beyond (NASDAQ: BBBY) is no stranger to short squeeze activity having staged multiple high volume surges last year. The popular meme stock was one of the biggest winners of the January 2021 short squeeze derby and still has the makings for another run. Aside from remaining a hot topic of discussion among armies of retail traders, Bed Bath & Beyond’s float is 26% shorted and the stock has a 2.5 short ratio.

There’s good reason the retailer continues to get pummeled by the bears. It has been hard hit by supply chain constraints and inventory shortages not to mention rising transportation costs. While these headwinds are industrywide, Bed Bath & Beyond’s slow e-commerce development has complicated matters. A company that was once expected to produce a sizeable 2021 profit is now expected to report a loss.

On the bright side, Bed Bath & Beyond’s e-commerce capabilities are improving. Subscriptions are on the rise and website visitors are sticking around more often to make purchases. Meanwhile, company insiders have been buying shares like they too will soon be missing from store shelves. If management can produce some better-than-expected quarterly results and present a brighter outlook for 2022, the troops could be rallied for another powerful short squeeze.

Is Beyond Meat Stock a Short Squeeze Candidate?

Once a must-have high flying growth stock, Beyond Meat (NASDAQ:BYND) is on pace to post its seventh consecutive monthly decline. The plant-based meat products supplier has been pounded by labor shortages and logistics snags that have contributed to weaker than expected financials during the economic recovery. Negative sentiment around restaurant traffic and retail execution have contributed to the stock’s current 36% short float.

The equally daunting 5.1 short ratio implies that it would take short sellers a full trading week to cover their positions should a squeeze attack ensue. For this to occur, however, options trading will likely have to shift from bearish to bullish. This could be starting to happen with the February 4th options presently at a 0.57 put-to-call ratio, the lowest it has been in a while.

What could also spark a turnaround is a contrarian bull among sell-side research firms. Not one Wall Street analyst has called Beyond Meat stock a buy since Citigroup gave it an optimistic $122 price target in late-October. If the market starts to warm up to the alternative burger maker after its Q4 report, Beyond Meat could be sizzling again by Spring.

Startups

Dune: Awakening is an open world survival MMO

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Dune: Awakening made its debut at The Game Awards as an open world survival massively multiplayer online game.

The game from Funcom and Nukklear looks beautiful, full of very detailed imagery of the desert planet Arrakis, also known as Dune. The game asked for beta signups, but we got no other information. Survival is the key word. Dune is a very deadly world, with sandworms and an unforgiving climate.

You can see places in the trailer like the city of Arakeen by day and night, as well as desert biomes and more. It’s not clear when it is coming. With luck, it will be close to the second Dune movie coming in late 2023.

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Rumors confirmed, Street Fighter 6 kicks off in June 2023

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Fighting Game fans are excited now that Capcom announced that Street Fighter 6 is coming to PS5, PS4, Xbox Series X/S and PC on June 2, 2023. The game was initially announced in February 2022, but that reveal did not include a specific release date beyond 2023.

The trailer at The Game Awards focused on new mini games and the international setting. In addition to the 18 previously announced fighter, the trailer also confirms that several new fighters — Dee Jay, Manon, Marisa and JP — that will join the game’s roster.

Notably, the June 2 release date for Street Fighter 6 may be a strategic choice for Capcom. June is the very beginning of Q3.

The last installment of the franchise — Street Fighter V — released nearly seven years ago so fans have been eager for another installment. A day before The Game Awards, the game’s June release date was leaked via the PlayStation Store.

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5 Things to Do Now to Propel Your Business in 2023

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Opinions expressed by Entrepreneur contributors are their own.

Entrepreneurship is a daily leap of faith. In times of economic uncertainty, that leap may feel like a dive off a cliff. We are in one of those times. It likely will take months to fully re-adjust to the forces that have pummeled the world’s economy, and to entrepreneurs, months can feel like years.

With the right playbook, entrepreneurs can survive and thrive in whatever economic scenario. Here are five things you can do to propel your business ahead now and through the difficulties of business cycles for years to come.

1. Learn the lessons of more challenging times

A rocky economy presents a unique opportunity to make tough decisions about the business plan. Everything is open to reexamination. How has the market changed? Are your customers facing challenges that create new opportunities for your solutions? How do new conditions change your assumptions, and what actions do you need to take in response?

Critically evaluate your product roadmap. Is this the time to pivot or become more aggressive with your current plans? Prioritize the highest margin features that are achievable in the next twelve months. Push out projects that don’t make that list, and re-assign resources accordingly. Re-assess pricing. Even as inflation tiptoes back from the highest levels in forty years, raw material and transportation costs remain way up. What will impact your customers if you adjust the pricing or add surcharges to offset these costs, at least temporarily?

It’s been a rough year for hiring. Many companies took the talent they could get. If there are employees or gig workers who would fare better in a different job, now is the time to let them go. Make tough-minded corrections that will pay off overall — corrections that might be avoidable in less challenging times.

Related: How to Turn Inflation and Recession into Your Largest Business Opportunity

2. Tighten your grip on cash

Venture capitalists are pulling back. In the third quarter, Crunchbase reported that funding for startups in U.S. and Canada fell 50% year-over-year. Valuations are down across the board. If you are fortunate enough to be a later-stage startup that benefited from VC largess in 2021, make your last raise last longer than intended.

Keep your dry powder dry, and put off going for another round until the markets even out. Reemphasize the basics for early-stage companies with less market validation and greater distance between now and a potential exit. Delay all capital expenditures. Leverage the hybrid work model if possible, to reduce rent and other office expenses. Continue with Zoom or Google Meet. Now is not the time to rack up travel costs. Re-negotiate fees and terms with service providers. Seek credit terms with key suppliers, in a word, bootstrap.

3. Talk to customers, in person. Now.

How have the business needs of your customers — whether paying or beta — changed over the last 18 months? Are there benefits to your solution that have more recognized value now? Nearly every business, for example, from corporates to startups, has been forced to re-learn the lessons of supply chain management. Startups that can help their customers make better business decisions based on artificial intelligence (AI), reduce costs by improving inventory management or protect against out-of-stock scenarios by identifying and building relationships with new, more local sources of supply will have an edge.

Related: Finding Validation in Serving Customers

4. Non-dilutive capital

According to PitchBook, venture capitalists are showing greater interest in portfolio companies “whose satellite, robotics and software tools can do double duty” in military and commercial markets. International conflicts are one reason, of course.

Another is that the defense and military security industries are generally viewed as recession-proof. Our firm routinely encourages portfolio companies to consider non-dilutive funding from the Small Business Administration — grants to support cutting-edge technologies range from $150,000 to more than $1 million.

Navigating the application process isn’t for the faint of heart. A startup must be realistic about the work involved, but in many states, there are resources to help. Besides the funding, severe responses to agency requests for proposals are reviewed and evaluated by technologists. At a minimum, this can be terrific feedback and a great source of industry contacts.

5. Blue-chip cultures attract blue-chip talent

Company culture can be an asset or a liability. An inclusive, rich culture helps key hires say yes. Finding stakeholders that believe what you believe and are aligned with your team’s values significantly improves the odds that they will stick with you in good times or bad.

After months of “great resignation” fever, the over-heated demand for talent may be cooling off. Maybe offers aren’t as fast or grand as they were a year ago. Maybe Twitter won’t be the only advanced technology business to let people go. Regardless, the search for great talent isn’t a faucet that a young company turns off and on. A startup might modulate the timing or the number of hires but stand at the ready to recruit and filter for culture fit.

Related: 3 Ways to Stay Competitive in the War for Talent

With the right mindset and intentional approach, an entrepreneur can make 2023 a year to strive and thrive. As Yogi Berra, my favorite baseball player of all time, said, “Swing at the strikes.” In business, like baseball, the right swing can turn even the most challenging pitch into a hit.

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