Stocks to sell

The Short-Squeeze Ain’t Happening: 3 Stocks to Move On From

Heading into autumn, traders are looking for the next big short-squeeze stock. A common fallacy is that we should turn to former meme and short-squeeze stocks in hopes that lightning will strike twice. But the magic is long gone for these former high-flying entities. These three stocks’ best days are already behind them. Here’s my list of the top short-squeeze stocks to avoid this fall.

AMC Entertainment (AMC)

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AMC Entertainment (NYSE:AMC) has been one of the longest-running short-squeeze stocks. Traders have been excited about AMC since early 2021. And, indeed, AMC stock enjoyed one of the largest short-squeezes on record, with the stock surging more than 2,000% from trough to peak.

Unfortunately, many traders failed to cash out when the short-squeeze happened and instead stuck with the name long past its prime. Since then, AMC’s weak fundamentals have fully reasserted themselves. The company continues to lose money and has taken to increasingly creative measures, such as the recent APE stock dealings, to issue more stock and raise funds.

Recently, the APE stock conversion occurred, created a massive quantity of new AMC stock. Not surprisingly, AMC stock has tanked as the float broadened and any remaining potential for a short-squeeze ended. Indeed, while it cost as much as 1,000%/year to borrow AMC stock for short sales in the past, this plunged to just 6.6% today.

To sum up: there was a short-squeeze at AMC, it’s over, and now that the company is being judged on its lackluster fundamentals shares will continue to slide.

C3.ai (AI)

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At the onset of the artificial intelligence (AI) stock boom, C3.ai (NYSE:AI) surged to prominence. After all, the company had the perfect ticker symbol for the moment. Not surprisingly, it became a focal point for traders looking to cash in on the AI boom.

However, C3.ai’s enterprise-focused big data style consulting and predictive insights is far removed from generative AI tools such as OpenAI’s ChatGPT or Midjourney. C3.ai simply isn’t in the same field as where most of the AI attention is today.

To that point, just 17% of the company’s bookings were driven by its AI platform last quarter. And C3.ai’s largest customer remains the oil and gas industry. That’s hardly the sort of glamorous partner that traders are probably expecting in the AI space.

Nonetheless, C3.ai shares are still up more than 170% year-to-date. It’s asking too much to expect a further short-squeeze given the firm’s slow revenue growth and large operating losses.

Medical Properties Trust (MPW)

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Medical Properties Trust (NYSE:MPW) is a real estate trust focused on hospitals. And while the firm has long been controversial given its concentrated customer base, several of its major tenants have run into significant and ongoing financial problems lately.

The Wall Street Journal highlighted Medical Properties Trust’s latest issues in a bleak report titled “Cracks Deepen for America’s Biggest Hospital Landlord: Struggling Tenants, a Bailout on Hold.” Other analysts have called the firm’s accounting a “shell game“. Management has been quick to blame short sellers and purported internet rumormongers for the firm’s persistently declining stock price. However, it’s tough to argue that The Wall Street Journal isn’t a credible news source.

Given MPW’s worsening balance sheet, the firm slashed its dividend by 50% recently. As yield chasers abandon MPW stock amid its reduced dividend and slumping outlook, it’s time for traders to move on as well.

On the date of publication, Ian Bezek did not have any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Ian Bezek has written more than 1,000 articles for InvestorPlace.com and Seeking Alpha. He also worked as a Junior Analyst for Kerrisdale Capital, a $300 million New York City-based hedge fund. You can reach him on Twitter at @irbezek.