Following the GameStop (NYSE:GME) short squeeze extravaganza over the last month, traders are looking into similar candidates for stock volatility. Conditions creating these events are now more pressing. At the end of May, the Energy Information Administration (EIA) reported the lowest seasonal demand level for diesel since 1998.
Given diesel’s prolific usage in trucks and trains, this suggests an economic slowdown, aligning with slower GDP growth and slower consumer spending. Conversely, an economic downturn is poised to have a greater effect on companies with weaker fundamentals. Ahead of this, short sellers would bet on their stock prices to fall.
With the potential for market pessimism getting higher, triggering more volatility, which stocks have highest short interest in the short term?
SunPower – 88.66% float shorted
In March, a hailstorm devastated Fort Bend County farm’s thousands of solar panels. This was just one recent instance showcasing the fragility and unreliability of solar power on a mass scale.
In turn, the narrative is shifting towards nuclear power as the cleanest and densest form of energy. Even Larry Fink of BlackRock, having pushed the ESG framework for years, warned that “the world is going to be short power…you need dispatchable power” in the age of growing data centers for generative AI.
These trends point to de-prioritizing SunPower Corporation's (NASDAQ:SPWR) business model, centered around residential solar solutions. The company is scheduled to report its earnings tomorrow, on June 5th. In the last Q4 ‘23 report in February, SunPower exited the year with a net loss of $247 million, depleting its cash reserves to $87.4 million from $123.7 million in a year-ago quarter.
Presently, SPWR stock is holding at $2.97, under its 52-week average of $5.30 per share. This price aligns with the Nasdaq average target of $3.07 per share. Over the last month, SPWR shares are up 27%.
Arbor Realty Trust – 43.56% float shorted
Normally, a real estate investment trust (REIT) would be a good bet for steady dividend income, owing to the requirement to pay out at least 90% of taxable profits in dividends. Arbor Realty Trust (NYSE:ABR) has a dividend yield of 12.22% at $1.72 annual payout per share.
However, if the market downturn is on the horizon, this would translate to a higher unemployment rate, decreased housing demand, increased loan defaults, and ultimately, the fall of housing prices. This would negatively affect Arbor Realty’s bottom line as a multifamily and single-family rental.
Moreover, as of May 28th, 2024, investigative firm Viceroy Research issued another dire report on Arbor’s financial status. This includes extended financing to delinquent customers at the firm’s expense. Owing to impairments and delinquency risks, the report concluded with the following warning.
“There is no rate cut large enough, no rate caps cheap enough, and no investors dumb enough to save Arbor.”
However, given that Viceroy Research is a short seller, it may paint such a picture for its own benefit. Over the last month, ABR stock has been up 6.3%. At the present price of $13.83, ABR shares are not far from their 52-week average of $14.11. Nasdaq’s forecasting data puts the average ABR price target in the present range at $13.45 per share.
ImmunityBio – 38.02% float shorted
As one of many penny biotech stocks, ImmunityBio received positive news in April following the FDA’s approval of Anktiva for treating non-muscle-invasive bladder cancer (NMIBC). This is in combination with the company’s Bacillus Calmette-Guérin (BCG) vaccine.
In other words, Immunitybio Inc's (NASDAQ:IBRX) short interest is more related to its borderline penny stock status, and accompanying volatility, rather than on weak fundamentals. From the last in-depth coverage of ImmunityBio earlier in May, IBRX stock is down 32%, from $8.12 to present $6.15 per share.
Placed into context, IBRX stock is up 62% over the last six months, while down 32% over the last month. Nasdaq’s average IBRX price target is now in sync with the price, at $6 per share.
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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.
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