Investors betting against electric-vehicle stocks take note: Five of 25 stocks that short-selling research firm S3 Partners identified this month as being at risk of a short squeeze are in the EV business.
Short sellers fear short squeezes. To put on a short, investors borrow shares. If the stock falls, the short seller buys them back at the lower price and returns them to the lender, pocketing the difference. But if good news lifts the price, the shorts may be forced to close their positions—squeezed—sending shares higher.