Are the bears going to be hit hard again? Multiple heavily shorted US stocks are surging strongly.
Consumer stocks in the heavily shorted US stock market rose on Monday, with Fisker reaching an agreement with institutional investors and the possibility of a merger between Spirit Airlines and Jetblue Airways. Other heavily shorted stocks also performed strongly. Last week, S3 Partners reported the top 10 stocks with the highest borrowing rates, with nearly half of them rising on Monday.
Zhitong App learned that some heavily shorted US consumer stocks rose on Monday.
Among them, American electric vehicle manufacturer Fisker (FSR.US) rose more than 17% on Monday, with an early morning surge of over 40%. In terms of news, Fisker reached an agreement with institutional investors on convertible notes.
Spirit Airlines (SAVE.US) rose more than 19%, and there is speculation that the airline will merge with Jetblue Airways. Last Friday, the two companies announced that they would appeal a federal judge's antitrust ruling that blocked their merger. It is understood that Jetblue Airways has agreed to acquire Spirit Airlines for $3.8 billion, making it the fifth largest airline in the United States.
Other heavily shorted stocks also performed strongly, with Plug Power (PLUG.US) rising nearly 6%, Mondee Holdings (MOND.US) rising nearly 16%, Vroom (VRM.US) rising 20%, LI-CYCLE (LICY.US) rising 22.5%, and The Beauty Health (SKIN.US) rising nearly 16%.
Last week, S3 Partners reported the top 10 stocks with the highest borrowing rates, with short interest exceeding $25 million. The list includes VinFast Auto (VFS.US), Beyond Meat (BYND.US), B. Riley Financial (RILY.US), Freedom Holding (FRHC.US), Cassava Sciences (SAVA.US), Sirius XM (SIRI.US), ImmunityBio (IBRX.US), Global Partners (GLP.US), Soleno Therapeutics (SLNO.US), and Hut 8 (HUT.US). Among these heavily shorted stocks, nearly half of them rose on Monday.
It is understood that borrowing rates are one of the many indicators to be observed when shorting stocks. Generally, high borrowing rates indicate high short selling demand. In addition, higher borrowing rates may also indicate a shortage of funds. According to Ihor Dusaniwsky, Managing Director of S3 Partners, the rise in stock borrowing rates may force some short sellers to close their positions and exit before others buy and push up the stock price to realize profits.
Last year, due to the significant rise in the US stock market, the short sellers suffered heavy losses. According to data from S3, overall, the short sellers incurred a book loss of nearly $195 billion by the end of 2023, offsetting about two-thirds of the approximately $300 billion in profits they made during the market crash in 2022.