Shorting a stock is a way for traders to make money while speculating that the stock price will fall. The highest short sold stocks are usually those that have been overvalued and therefore have a high probability of incurring a loss in value. In short, this allows traders to make money from those who are willing to pay market prices for stocks.
When a trader opens a short position, he borrows shares of the stock he thinks will go down in value. Then they sell the shares and then buy them back if the stock drops as they expected. Then, the trader returns the shares to the original owner and can enter the difference between the buy price and the sell price (hopefully higher).
In addition, short stocks may allow some traders to make a large amount of money fairly quickly. Michael Perry is best known for selling $100 million in the housing market amid the Great Recession, as well as $750 million in profits to investors.
However, short selling is a high-risk strategy that can lead to incalculable losses due to margin calls. To be clear, this is an advanced strategy that is usually reserved for professional traders and investors. However, if you are interested in short selling, here are the top shorted stocks to buy:
- Esperion Therapeutics Inc. (Nasdaq: ESPR)
- Heron Therapeutics, Inc (NASDAQ: HRTX)
- Biofrontera, Inc. (NASDAQ: BFRI)
- Beyond Meat, Inc. (NASDAQ: BYND)
- Blink Shipping Company (NASDAQ: BLNK)
Top short stocks to buy
Now, we’ll take a closer look at each of these short-selling stocks. And why do they make the list?
Esperion Therapeutics Inc.
Esperion is a therapeutic company focused on developing and marketing drugs to reduce the risk of cardiovascular disease. It is headquartered in Ann Arbor, Michigan. The company owns two products, Nexletol and Nexlizet. Both drugs are intended for those who need an additional lowering of LDL-C.
Helping Pay Short Positions in ESPR is the company’s last public offering of $225 million of stock. However, the bid did not go as planned, and shares of Esperion fell 40% to $5.39 on December 3. As of November 2021, approximately 35% of the ESPR Flotation Center has been sold.
This short-stock company specializes in dermatology. Biofrontera develops and provides photodynamic therapy and topical antibiotics. Their products include Xepi and Ameluz, both of which are skin creams for topical use. In addition, it also manufactures BF-RhodoLED, an LED lamp used in examination rooms. The company is headquartered in Leverkusen, Germany.
Founded in 1997, Biofrontera went public in late October 2021. It debuted at just under $4.50. It rose to about $13.15 in late December. Since then, its shares have fallen more than 30%. More importantly, BFRI is one of the largest stocks short sold at the moment. It has more than 89% of its floated short deal.
Heron Therapeutics, Inc
Heron Therapeutics is a biotechnology company focused on acute and oncology care. In terms of acute care, their products help reduce postoperative pain as well as nausea and vomiting. For oncology care, it helps reduce negative side effects of cancer treatments. Heron products include Sustol, Cinvanti, and Zynrelef.
Recently, Heron (HRTX) has been severely deficient. The shares are down more than 50% since early December 2021. Heron currently has negative earnings per share (EPS). Its profit margin is negative as well, and so is its cash on hand. Its stock is overvalued at the moment, too. In November 2021, approximately 32% of its floating position was sold.
Keep reading for more information about the top short-selling stocks.
Top Shortlisted Stock #2 Beyond Meat, Inc.
Beyond Meat is a highly deficient stock that produces plant-based meat substitutes. A product that has gained popularity in recent years. Along with Impossible Foods and similar companies, some see Beyond Meat as the future of the food industry. It produces burgers, sausages, chicken and more.
Despite this, Beyond Meat has a target on its back for short sellers. BYND is far from its high after the company’s initial public offering. But even compared to its most recent peak at $192 in early January 2021, it has fallen significantly. It fell less than $65 per share. To make matters worse, the company is not profitable and is losing money. As a result, over 34% of his moving position is currently being sold.
Top Shorted Stock No. 1 Blink Charging Co.
Blink Charging designs, manufactures, owns and operates electric vehicle charging stations. Its products include both Level 2 and Level 3 or DC fast charging stations. Its charging stations can provide up to 175 kilowatts of power. It also manufactures mobile charging stations. As of 2020, it has more than 23,000 charging stations.
Electric cars and electric vehicle charging are growing industries. However, Blink is struggling to keep up with larger competitors such as ChargePoint. Perhaps this is partly the reason for the volatility of the price of BLNK. Which has fallen from more than $60 per share in early 2021 to about $26 in December 2021. In addition, Blink loses money every three months. All this adds up to more than 34% of Blink’s shares being short sold.
About Bob Heigl
Bob Heigl is a personal financial writer specializing in investing and retirement planning. The huge student loan burden inspired him to pay off his loans and now he is helping others organize their finances. When he’s not writing, he enjoys traveling and live music.