Traders betting against the shares of Coinbase Global Inc., CarMax Inc. and GameStop Corp. should be on high alert: The stocks are all prime candidates for a short squeeze that could stick these speculators with steep losses.
The three firms sit atop a list of companies that S3 Partners LLC gives its highest “Squeeze Score” of 100, meaning they’re the most in danger of an event forcing traders to swiftly exit positions, a move known as short covering.
The past month’s rally in US stocks “has made short positions more crowded and more squeezable as the mark-to-market value of shorted shares increases,” Ihor Dusaniwsky, managing director of predictive analytics at S3, wrote in an April 12 note.
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