The macroeconomic climate in 2022 and 2023 has had a negative impact on many equity investments. Fears of a possible recession and a gloomy attitude among investors have affected companies in precarious financial situations.
However, this challenging market has also led short sellers to increase their bets in response to unfavorable conditions, with a risk-averse approach. In turn, Finbold analyzed the five companies with the highest number of short positions, based on the float shorted as of January 24,
Notably, PaxMedica Inc. (NASDAQ: PXMD), an American pharmaceutical firm, was the most shorted stock, with 71.5% of its entire float shorted. The second most shorted stock as of January 2023, with 60.9% of the float shorted, was Silvergate Capital Corporation (NYSE – SI), while marginally behind in third was Grom Social Enterprises Inc (NASDAQ: GROM) with 59.21%, respectively.
PaxMedica Inc. (NASDAQ: PXMD)
PaxMedica, an early clinical-stage biopharmaceutical company, in the last month PXMD has been trading in the $1.36 – $3.15 range, which is quite wide, it is currently trading near the high of this range. Prices have been rising strongly lately, so it may be a good idea to wait for a consolidation or pullback before considering an entry.
However, a resistance zone from $2.91 to $2.94, is observed, formed by a combination of multiple trend lines across various time frames.
Silvergate Capital Corporation (NYSE: SI)
Silvergate, a holding company, which engages in the provision of banking and loan services over the last month, has been trading within a wide range of $10.81 – $22.08. At the moment, it is trading in the middle of this range, so there may be some resistance if the price tries to move higher. Resistance at $18.63 from a trend line in the daily time frame is observed. Volume has been considerably higher in the last couple of days, which is what you like to see during a strong move up.
Grom Social Enterprises Inc (NASDAQ: GROM)
Grom Social Enterprises, Inc. is a media, technology, and entertainment company that focuses on delivering content to children.
The volume of shares traded for GROM has been significantly higher in the last couple of days, which is a positive sign during an upward movement. Prices have been rising strongly lately, it may be a good idea to wait for a period of consolidation or a pullback in the stock price before considering entering a position.
Over the last month, the stock of GROM has been trading within a wide range of $1.21 – $2.33. At the moment, it is currently trading close to the upper end of this range, indicating a strong bullish sentiment among investors. It is important to note that this wide range suggests a high degree of volatility in the stock, and investors should consider their risk tolerance before entering a position.
Carvana Co (NYSE: CVNA)
Carvana is a holding company and an eCommerce platform that engages in the buying of used cars and the provision of different and convenient car buying experiences.
The long-term trend for Carvana stock is negative, but the short-term trend is showing positive momentum, indicating that the stock is gaining increasing favor among traders and investors. In the last month, CVNA has been trading within a wide range of $3.62 – $8.44. The stock is currently trading in the middle of this range, which suggests that there may be some resistance if the price tries to move higher.
Sitio Royalties Corp (NYSE: STR)
Sitio Royalties Corp is a US-based company operating in Oil, Gas & Consumable Fuels industry.
The stock of STR has been displaying a high degree of volatility in recent times, as evidenced by the wide trading range of $24.96 – $30.73 over the last month. The stock is currently trading in the middle of this range, which suggests that the price may encounter resistance if it attempts to move higher. However, it is important for investors to take into account that volatility can also present opportunities for entry in a well-timed manner.
The stock of STR is currently facing resistance at $30.14, as indicated by a horizontal line in the daily time frame. Additionally, a resistance zone ranging from $33.09 to $33.09 is formed by a combination of multiple trend lines in multiple time frames. This suggests that the price may encounter further resistance if it attempts to move higher.
In summary, the companies that made the list of most shorted stocks all had weak balance sheets or business models, which were warning signs for short sellers. It’s important to note that short selling is a high-risk activity that requires thorough research and consideration.
it is also important to keep in mind that resistance levels are not fixed and can change over time, and it would be advisable to monitor the stock’s performance and technical indicators continually.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.