Investors felt like it was 2021 all over again when shares of Avis Budget Group (NASDAQ: CAR) soared from $100 to $850 in just over three weeks.
No announcement or breakthrough caused the surge; just a classic short squeeze story involving an artificially-limited float and unbridled risk-seeking behavior.
The squeeze was orchestrated by a pair of hedge funds that effectively gained control of the entire float. Through stock and swaps, Pentwater Capital and SRS Investment Management controlled more than 80% of the float in a stock already seeing 13% short interest.
As a result, basically no shares were available for shorts to cover, and the feedback loop sent the stock up more than 500%. Like most short squeezes, the trade quickly unwound, and CAR shares are back in the low $200's. But this episode was a great refresher on short-squeeze mechanics and also could set the stage for the next batch of squeezes.
3 Stocks With High Short Interest That Could Squeeze Next
A true short squeeze requires three elements: a high level of short interest, a lengthy days to cover period, and a catalyst that can ignite a rally.
High short interest, with more than 5 days to cover, may create a difficult environment for short sellers to locate shares to close their positions. And when shorts are scrambling to cover while buyers pour in, that’s when the feedback loop of the short squeeze really sets in. Here are three stocks that match these criteria.
Groupon: Clean Short Squeeze Setup With Upcoming Earnings Catalyst
Online discounting marketplace Groupon Inc. (NASDAQ: GRPN) is always a popular short-squeeze candidate thanks to its earnings volatility and its general inability to turn revenue into profit.
And the shorts have mostly been rewarded over the years as GRPN shares have lost more than 65% of their value over the last five years.
But heavily shorted stocks often provide brief windows of opportunity, and Groupon has the classic short-squeeze setup that traders often seek.
First, GRPN has more than 50% of its float sold short, up more than 5% from the previous month. The stock entered the year with about 40% of the float sold short, so this is an acceleration from earlier levels. And crucially, shorts would need roughly 11.3 days to cover under average trading volume, which opens a lengthy window for a short squeeze to materialize.
In addition to the classic high short interest plus high days to cover combo, Groupon has a catalyst on the horizon with its Q1 2026 earnings release on May 6. An upside surprise could put more pressure on shorts, as the stock has already popped more than 30% in the last month.
Ignore the recent pullback; the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) indicator both show swelling buying momentum ahead of the earnings catalyst.
Asana: Founder Control Shrinks the Tradable Supply
Asana Inc. (NYSE: ASAN) is the work management software platform founded by Dustin Moskovitz, one of the original designers of Facebook and a tech sector staple.
The company has struggled to achieve profitability over its nearly two decades of operations, but recently posted back-to-back positive EPS figures in fiscal Q3 and Q4 2026.
It also posted record revenue of $205.57 million in Q4 2026, which represented more than 9% year-over-year (YOY) growth. Sentiment may be turning in Asana; the stock received a rare upgrade from the Royal Bank of Canada in early April, and the share price has been trending up for the last few weeks.
Nearly 35% of the float is sold short in ASAN, with about 4.2 days to cover. That combo is already an intriguing short-squeeze setup, but Moskovitz’s controlling stake is so large that it artificially reduces the number of shares available for trading. He’s also been a relentless buyer during downturns, creating a dynamic similar to what unfolded at Avis.
Short interest is at its highest level since 2022, but indicators like the RSI and MACD suggest selling pressure is subsiding, and a steady influx of buyers could be the catalyst to ignite the squeeze.
Beyond Meat: Product News and Earnings Keep Volatility Elevated
Few stocks have incinerated capital like Beyond Meat Inc. (NASDAQ: BYND), which is down more than 99% since its 2019 IPO.
But that hasn’t stopped management from trying new things, and a few catalysts have the stock actually up more than 30% this month.
First, the company announced a partnership with Big Geyser for a protein-enhanced sports drink called Beyond Immerse. It also launched a new line of breakfast sausages and spicy chicken pieces, the latter to be sold exclusively at Kroger (NYSE: KR).
With more than 31% of the float sold short and about 4.0 days to cover, the stock has the technical underpinnings for a short squeeze. A bullish MACD crossover triggered a trend reversal in early April, and now the RSI is back in bullish territory for the first time since early March. The company reports earnings on May 6, so another potential catalyst is waiting in the wings.
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The article "Avis Short Squeeze Shocked the Market: Are These 3 Stocks Next?" first appeared on MarketBeat.
