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Wall Street Scans Short-Squeeze Targets Amid Reddit ‘Revolution’

  • Vir, 3D Systems, SunPower are potential candidates: S3
  • Day traders aren’t looking at fundamentals ‘at all’: Maley
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Photographer: Gabby Jones/Bloomberg

There are dozens of ways to pick stocks, but few have been as unconventional -- or as successful -- as the coordinated short-squeeze being deployed by Reddit’s army of day traders. Now, Wall Street is scanning for which of the market’s most-hated shares could be targeted next.

It’s simple, though not necessarily intuitive: identify a company with huge levels of short interest, and pile in. GameStop Corp. -- which entered the week with 139% of its available shares borrowed and sold short, according to data from S3 Partners -- served as a proof of concept. The video-game retailer has soared nearly 700% in five days forcing the likes of Citron Research and Melvin Capital to abandon their bearish positions.