3 Meme stocks ready to be reduced

Some of the best meme stocks had an epic rally in 2021. Hedge funds were on the beneficiary side as they were caught in a big meltdown. Times have changed and I don’t see the 2021 investor frenzy returning any time soon. However, no doubt there will be stocks of memes ready for a short squeeze. For short-term traders, identifying these meme stocks can help generate big profits in the blink of an eye.

Meme stocks can be defined as “stocks of a company that have gained viral popularity due to increased social sentiment”. The most important point to note is that the rally in meme stocks may have a complete disconnect with fundamentals.

Of course, good news from the company can increase the chances of a bigger rally in the near term. Let’s talk about three meme stocks poised for a short squeeze based on short float percentage interest.

Digital Marathon (MARA)

Digital Marathon (NASDAQ:MARA) the stock represents a company with average fundamentals. With a short interest that is 25% of float, I think it is among the best meme stocks ready for a short squeeze.

It is important to understand why investors are betting against MARA shares. The company strives to improve Bitcoin (BTC-USD) network while mining cryptocurrency. This means that if Bitcoin trends go down, the miner is likely to see a short correction. Additionally, the company has been slow to realize the expansion of its mining capacity. This can potentially impact earnings estimates.

However, if Bitcoin remains in an uptrend, MARA stock will rise. It should also be noted that the company continues to aim for hash rate capacity expansion, it hopes to reach 23EH/s by June. If the company can achieve this goal, the stock is likely to go ballistic.

If I were to buy a bitcoin miner from a long term investment perspective, there are better options like Riot platforms (NASDAQ:RIOT). However, MARA may soar in the coming months if catalysts play.

Lucid Group (LCID)

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While Lucid Group (NASDAQ:LCID) was presented as a You’re here (NASDAQ:TSLA) competitor, the behavior of the shares was purely speculative. In the past 2.5 years, LCID stock has only exceeded $50 in two instances.

Either way, the fall was equally steep and the stock is currently below $8. With short interest at 24% free float, this is another meme stock ready for a short squeeze. After a sustained decline, LCID stock looks massively undervalued and company fundamentals are average.

It should be noted that Lucid was disappointing last year in terms of production and deliveries. The company, however, reaffirmed its goal of producing 10,000 vehicles this year. Additionally, the company is fully funded through the second quarter of 2024. The launch of its Project Gravity SUV next year is another impending catalyst for the stock. Once a short squeeze rally is underway, it has the potential to bring returns of over 100%.

ChargePoint Holdings (CHPT)

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ChargePoint holdings (NASDAQ:CHPT) the stock has remained weak over the past 12 months. This did not deter investors from taking short positions in the stock.

There are two reasons why sentiment remains bearish. First, EV stocks have been battered and ChargePoint is focused on EV charging infrastructure. Additionally, the company is still in an early growth stage and valuations still look stretched.

That said, sentiment has been more bearish for a long time. All it takes is one example of good news to kick off a massive short-term rally. In terms of business fundamentals, ChargePoint is a leader in electric vehicle charging in the United States and has already expanded to 16 European countries.

The company generates revenue from hardware sales, software subscriptions and services. As the number of installed charging ports increases, recurring revenue will increase. This will result in a higher EBITDA margin.

As of the date of publication, Faisal Humayun does not hold (either directly or indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines.