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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
.
But on July 12, its stock soared more than 100% after Canoo announced a deal to sell electric delivery vans to
Walmart
.
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:
Faraday Future Intelligent Electric
,
Fisker
,
and
Lucid
.
They join meme stocks
GameStop
and
AMC
,
plus
Cowen
,
Veru
,
Erasca
,
Teladoc Health
,
and
“The recent rally off the June 16 lows…has made some crowded shorts more squeezable,” wrote S3 managing director Ihor Dusaniwsky. A key metric to identify potential squeezes is the short-interest ratio—how much stock is borrowed and sold short, compared with the total available for trading. The average short-interest ratio for the small-cap
Russell 2000
is 7%. The S3 list averages 27%.
Next Week
Monday 7/25
Whirlpool, Vodafone Group, Range Resources, Newmont, NXP Semiconductors, and Philips release financial results.
Tuesday 7/26
Visa, UPS, Microsoft, Kimberly-Clark, Mondelez International, Unilever, Stryker, 3M, Chipotle Mexican Grill, Skechers, Raytheon Technologies, PulteGroup, Moody’s, McDonald’s, General Motors, Coca-Cola, Alphabet, and General Electric host earnings calls.
The S&P CoreLogic Case-Shiller National Home Price Index for May is released. Home prices are expected to rise 21.1% year over year, compared with April’s 21.2% gain.
The Conference Board releases its Consumer Confidence Index for July. Economists forecast a 97 reading, a drop from June’s 98.7.
The Census Bureau reports new residential home sales data for June. Consensus estimate is for a seasonally adjusted annual rate of 680,000 new units, versus 696,000 in May.
Wednesday 7/27
The Federal Open Market Committee announces its monetary-policy decision. The central bank is expected to raise the federal-funds rate by 75 basis points.
Meta Platforms, Bristol Myers Squibb, GSK, Boeing,
Teladoc Health
,
Sherwin-Williams, Qualcomm, Humana, Ford Motor, Genuine Parts, CME Group, General Dynamics, Kraft Heinz, T-Mobile US, Etsy, Spotify Technology, and Danone report financial results.
The Census Bureau releases the preliminary durable goods report for June. Economists forecast that new orders increased 0.3% month over month from May’s 0.81% rise.
Thursday 7/28
Apple, Amazon.com, Samsung Electronics, Harley-Davidson, Volkswagen Group, Tilray Brands, Vivendi, Altria Group, Roku, Pfizer, Merck, Intel, Mastercard, Southwest Airlines, Honeywell International, Shell, and Northrop Grumman report financial results.
The Bureau of Economic Analysis releases its preliminary estimate for second-quarter 2022 gross domestic product. The forecast is for a 1.6% rate of growth, after a 1.6% contraction in the first quarter.
Friday 7/29
Weyerhaeuser, Phillips 66, Exxon Mobil, Procter & Gamble, Colgate-Palmolive, Chevron, AbbVie, and Sony discuss financial results.
The BEA reports personal income and spending data for June. Personal income is expected to rise 0.5% month over month, while spending is seen rising 1%. This compares with gains of 0.5% and 0.2%, respectively, in May.
The Federal Reserve reports the core personal-consumption expenditures price index for June. Consensus estimate is for the core PCE index to jump 4.8% year over year, compared with 4.7% in May.
Write to Al Root at [email protected]
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