Investors have a lot to consider when they think about selling stocks short. There is an infinite amount of risk taken on as a stock can go to the moon, so investors must be aware of the potential risks when selling a stock short. The basic idea of selling a stock short is selling something you don't own in the hopes of buying it back at a lower price.
Brian takes a look at three stocks that have potential to see quarter end selling. Money managers will often look at the stocks that have underperformed in 1/4 and in the last week of that same quarter they often move to trim that position. Short selling is much more complicated than just that.
Brian also takes a look at the idea of market cap and how that plays into which stocks you should think about shorting.
Meta META Is the first stock that Brian looks at and he believes that given the current environment this is a short sale opportunity even though it is a Zacks Rank #3 (Hold). Aside from what he points out in the video it should be noted that when there is a fear of recession advertisers tend to pull back on their budgets. META derives most of its revenue from advertising.
Carvana CVNA is the next stock that Brian looks at but this one might not be for everyone. Carvana CVNA Already has a very sizable short interest position. This means that there are a lot of shares sold short already and that makes it a crowded trade. Crowded trades can very easily find themselves to be the target of a short squeeze which puts upward pressure on the stock forcing shorts to cover. This is just one of many aspects investors must consider when they think about selling stocks short.
Block SQ Is the last stock that Brian takes a look at from the short perspective. This stock beat earnings a few weeks back but the stock saw plenty of selling pressure afterwards. It should be noted that this stock is among the best performers in the Short Sell List. Short Sell List is a paid for service from Zacks that focuses on stocks that have negative earnings estimate revisions.
You can learn more about Short Sell List and all of the other services provided by Zacks at Zacks.com.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report