Traders are once again piling into stocks with high levels of short interest, and several companies could prove the next targets of the latest frenzy unfolding on Wall Street. As the new year kicks off, retail traders are staging what may result in a last ditch effort to bring back from the grave some of 2022’s battered meme stocks. Bed Bath & Beyond shares surged nearly 69% on Wednesday despite sharing plans to layoff more employees and trim costs as it seeks to resurrect itself and stave off a potential bankruptcy filing . Other meme stock stars followed suit, including GameStop and AMC Entertainment , which gained 7% and 21% each. BBBY YTD mountain After tumbling 83% in 2022, Bed Bath & Bbeyond shares are on the rise Short-selling, or selling shares short, is a practice commonly used by hedge funds, although not exclusively. It consists of betting against a stock by borrowing shares and selling them, with the intention of buying them back later at a lower price, returning the borrowed shares and profiting from the difference. A short squeeze occurs when a stock price surges and forces those shorting the stock to purchase shares, or cover their shorts, to prevent losses. That typically drives the prices up higher still. Although a part of market lore forever, short squeezes are lately associated with the meme stock craze that shook Wall Street in 2021, as retail traders connecting through social media joined forces to buy shares of stocks including AMC and GameStop, inflicting maximum pain on short sellers. But after rallying in 2021, shares of Bed Bath & Beyond, AMC and GameStop pulled back in 2022, plunging about 83%, 76% and 50%, respectively. As another short squeeze unfolds now on Wall Street, CNBC Pro used FactSet data to search for the next potential candidates. We looked for companies listed on the New York Stock Exchange and Nasdaq with a short interest as a percent of float at 25% or greater, and a market cap exceeding $100 million. One stock ripe for attack is crypto-focused bank Silvergate Capita l, which cratered more than 88% in 2022 as digital coins and tokens slumped and crypto exchange FTX imploded. Silvergate’s short interest as a percent of float recently stood at nearly 61%, the highest among all the stocks included in the screen. Shares have fallen about 22% already in 2023 amid a batch of analyst downgrades and after the company disclosed a 68% decline in total deposits by digital asset customers in the fourth quarter. Between December 15 and December 30, short interest in the stock rose by $1.9 million. Popular online used car retailer Carvana has 58% of shares sold short. The stock collapsed 98% in 2022 as it grappled with a bleak outlook for used vehicles and concerns mounted over a potential bankruptcy filing. CVNA 1Y mountain Carvana’s stock tumbled nearly 98% in 2022 Vaccine maker Novavax saw a $5.9 million increase in short interest. About 36% of shares of the biotechnology company are sold short. Shares plummeted nearly 93% last year, tumbling 34% on one day alone in December as it proposed a sale of up to $125 million in common stock and a $125 million convertible debt offering. In its third-quarter results released in November, the vaccine maker posted an unexpected loss and revised its full-year guidance to the lower end of its previous range. Beyond Meat and Weber are two other potential short squeeze contenders that sold off sharply in 2022, with about 40% and 32.4% of their respective shares sold short. Weber a greed in mid-December to be taken private at $8.05 a share in a deal that hasn’t yet closed. Multiple electric vehicle and charging stocks, including EVgo , Fisker , Lucid , Blink Charging and Nikola , also turned up on the list. — CNBC’s Chris Hayes contributed reporting
