10 stocks that were the most shorted in August

JomNicha // Shutterstock Many people invest money in stocks with the long-term expectation they’ll rise in value, but one investment strategy is tied to a stock falling in price: short selling. Olive Invest compiled a list of some of the most shorted stocks in August 2022 from financial news website MarketWatch. This list includes three pharmaceutical companies and two companies that deal with electric vehicles. Short selling is the opposite of having a long position, where you buy and hold a stock. In shorting, an investor borrows shares of a company and sells them on the open market in hopes the share price will decrease. If that happens, the investor buys the shares back for less money, returns the borrowed shares, and clears a profit. If the stock price increases, the investor must buy the shares back at the higher price, incurring a loss. It’s an oft-maligned, high-risk investing strategy that can net both big profits and big losses. For that reason, it takes serious investing experience to do well. The concept of shorting stocks has been around for centuries. One of the first examples of shorting a stock was by investor Isaac Le Maire, who shorted the Dutch East India Company in the early 1600s. Unfortunately, however, his efforts to make the company’s stock price fall ended in failure. Continue reading to find out 10 most-shorted stocks in August. #10. Groupon Piotr Swat // Shutterstock -Symbol: UPST -Share of float shorted: 37.46% Upstart aims to disrupt the lending market by using AI to determine a borrower’s creditworthiness rather than a FICO score. Rather than lending money, it partners with banks or sells the loans to other institutions. Rising interest rates have made that strategy difficult, as lenders now are looking for higher profit margins on these loans, and sometimes they’re passing on them altogether. This forced Upstart to do its own loan originations, not all of which were good bets, and its balance sheet took a hit. This year the company has gone back and forth on how to manage the accounting of these loans, which has made Wall Street leery. Upstart also reported disappointing second-quarter earnings and doesn’t anticipate that its Q3 guidance will meet Wall Street’s expectations. #3. Bed Bath & Beyond Sundry Photography // Shutterstock -Symbol: BBBY -Share of float shorted: 40.44% The home-furnishings retailer known for its extensive couponing is now struggling to stay out of bankruptcy. In 2019, new CEO Mark Tritton implemented a new strategy to sell private label merchandise and attempted to overhaul its supply chain, neither of which succeeded. This led to bare shelves, which caused customers to abandon its stores in droves. Tritton left the company in June. The business is now attempting a restructuring that involves better cash management, layoffs, and store closures. All the while, it’s become a meme stock, and activist investor Ryan Cohen sold his entire stake of Bed Bath & Beyond stock. One more painful blow: The company’s CFO Gustavo Arnal died by suicide in early September. #2. PMV Pharmaceuticals Gorodenkoff // Shutterstock -Symbol: PMVP -Share of float shorted: 43.91% PMV Pharma aims to disrupt cancer. It researches and develops drugs that target mutant p53 proteins that normally would suppress cancerous tumors. In July PMV announced an agreement with Merck for clinical trial collaboration and supply, as it tests a small molecule investigational therapy in conjunction with Merck’s Keytruda. On the business side of the company, it has reported having less cash than a year ago, along with higher R&D and general and administrative expenses. Although it’s running through cash more quickly without any revenue, PMV likely will be able to raise money to remain solvent for the near term. #1. Intercept Pharmaceuticals Dmitry Kalinovsky // Shutterstock -Symbol: ICPT -Share of float shorted: 48.75% Intercept Pharmaceuticals focuses on treatments for liver diseases. In July, it released positive results for its treatment of nonalcoholic steatohepatitis, which were consistent with a study released in February 2019. However, news of the study results caused the company’s stock price to plunge mainly because the company also announced that it will resubmit an application to the U.S. Food and Drug Administration for this treatment. The government regulator declined its application in 2020 based on the potential for the risk of treatment to outweigh the rewards, and investors are concerned Intercept may be declined again. In the meantime, Intercept’s second-quarter earnings included a 68-cent loss per share, even though revenues exceeded analyst expectations. This story originally appeared on Olive Invest and was produced and distributed in partnership with Stacker Studio.