Following the recent GameStop (NYSE) short squeeze, traders are eyeing stocks with high short interest as potential candidates for volatility. The Energy Information Administration (EIA) reported the lowest seasonal demand for diesel since 1998, suggesting an economic slowdown.

With diesel’s significant use in transportation, this indicates slower GDP growth and reduced consumer spending. As the economic downturn looms, companies with weaker fundamentals are likely targets for short sellers betting on falling stock prices.

With the potential for market pessimism getting higher and triggering more volatility, which stocks have the highest short interest in the short term? some stocks with the highest short interest in the short term:

SunPower Corporation (NASDAQ) stock – 88.66% Float Shorted

SunPower, focused on residential solar solutions, faces challenges after a recent hailstorm in Texas, which highlighted the fragility of solar power. The shift towards more reliable energy sources like nuclear power is gaining momentum.

SunPower is set to report its earnings on June 5th, following a net loss of $247 million in Q4 2023, and a drop in cash reserves to $87.4 million. Currently, SPWR is trading at $2.97, below its 52-week average of $5.30. Despite a 27% rise in the past month, short interest remains high.

Arbor Realty Trust (NYSE) stock – 43.56% Float Shorted

Arbor Realty Trust, a real estate investment trust (REIT), offers a high dividend yield of 12.22% but faces potential risks from an economic downturn. Increased unemployment, decreased housing demand, and higher loan defaults could negatively impact Arbor Realty’s financial health.

A recent report by Viceroy Research highlighted financial concerns, including extended financing to delinquent customers. ABR stock is up 6.3% over the last month, currently trading at $13.83, close to its 52-week average.

ImmunityBio Inc. (NASDAQ) – 38.02% Float Shorted

ImmunityBio, a biotech company, saw positive news in April with the FDA’s approval of Anktiva for treating bladder cancer. Despite this, IBRX’s status as a borderline penny stock contributes to its high volatility and short interest. The stock has dropped 32% in the last month, from $8.12 to $6.15, although it is up 62% over the past six months. Nasdaq’s average price target is aligned with the current price at $6 per share.

Conclusion

As market pessimism grows, these stocks with high short interest could experience increased volatility. Traders should remain vigilant and consider the potential risks and rewards in this uncertain economic environment.

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