Traders targeting heavily shorted stocks are looking to play one of two sides: betting on a company's downfall or hunting for a short squeeze.



Here is a breakdown of why these stocks attract so much attention and a look at the current market landscape.



<ul>
<li>LCID stock is heavily shorted. See the chart and price action here. </li>
</ul>



<h2>Why Do Stocks Get Heavily Shorted?</h2>



Investors and traders often maintain a high level of short interest whenever a stock is overvalued.



They are betting that the company faces significant risks—such as poor earnings, a failing business model or industry headwinds—that will eventually drive the stock price down.



The Two Sides of the Trade



<ul>
<li>The Bear Case: Short sellers rely on meticulous research to identify companies they believe are ticking time bombs.</li>



<li>The Bull Case: On the flip side, retail traders often view high short interest as a coiled spring. If the stock price starts to rise, it can trigger a short squeeze. </li>
</ul>



<h2>The Mechanics of a Short Squeeze</h2>



A short squeeze is a volatile feedback loop that can lead to explosive gains in a very short window. 



It begins when a stock's price rises unexpectedly, forcing short sellers to frantically buy shares back to cover their positions. 



The forced buying creates a sudden spike in demand, which pushes the price even higher, trapping more short sellers in the feedback loop. 



The volatility of a short squeeze can lead to returns that far exceed typical stock movements in a very short time frame.



<h2>Top 10 Most Shorted Stocks </h2>



Here are the most heavily shorted stocks (with market caps above $2 billion and free floats above 5 million) as of Feb.2, according to data from Benzinga Pro. 



In the table below, stocks are ranked by short interest — the total number of shares sold short and not yet covered, expressed as a percentage of shares available for public trading.



<figure class="wp-block-table"><table><tbody><tr><td>COMPANY NAME &amp; TICKER </td><td>SHORT INTEREST (%) [Feb. 2, 2026]</td></tr><tr><td>Choice Hotels International, Inc. (NYSE:CHH)</td><td>56.33%</td></tr><tr><td>Lucid Group, Inc. (NASDAQ:LCID)</td><td>54.45%</td></tr><tr><td>Avis Budget Group, Inc. (NASDAQ:CAR) </td><td>52.38%</td></tr><tr><td>Under Armour, Inc. (NYSE:UAA)</td><td>41.22%</td></tr><tr><td>Hims &amp; Hers Health, Inc. (NYSE:HIMS)</td><td>36.46%</td></tr><tr><td>ImmunityBio, Inc. (NASDAQ:IBRX)</td><td>36.46%</td></tr><tr><td>Kohl's Corp. (NYSE:KSS)</td><td>36.39%</td></tr><tr><td>MARA Holdings, Inc. (NASDAQ:MARA)</td><td>36.21%</td></tr><tr><td>TransMedics Group, Inc. (NASDAQ:TMDX)</td><td>36.14%</td></tr><tr><td>Medical Properties Trust, Inc. (NYSE:MPT) (NYSE:MPW) </td><td>36.02%</td></tr></tbody></table></figure>



<figure class="wp-block-image size-large is-resized"></figure>



<h2>Reminders:</h2>



<ul>
<li>Highly shorted stocks are battlegrounds where negative fundamentals meet speculative trading.​</li>



<li>Short squeezes can deliver huge, fast gains, but at very high risk and volatility.​</li>



<li>Monitoring the short interest leaderboard can help identify which stocks might be the next short squeeze, but timing such trades remains extremely challenging.​</li>



<li>Always conduct due diligence, as the volatility often reflects deep underlying risks and business uncertainty.</li>
</ul>



Photo: Shutterstock

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The article discusses heavily shorted stocks, highlighting ten potential short squeeze targets, including Lucid, Kohl's, and Avis. It explains the dynamics of short selling, where investors bet against overvalued companies, and the mechanics of a short squeeze, which can lead to rapid price increases. The top ten most shorted stocks are listed, ranked by short interest percentage, emphasizing the risks and volatility associated with these trades. Investors are reminded to conduct thorough research before engaging in such speculative trading.

These 10 Stocks Could Be Short Squeeze Targets: Lucid, Kohl's, Avis and More