Short interest refers to the percentage of publicly available shares that have been sold short. It is an indicator used by many investors to determine how strong a company’s bear thesis may be. Due to the nature of short selling, the short interest has become a popular indicator among investors.
The reason it is given so much weightage is that people betting against a stock have usually done solid research and are confident of a company’s downfall. They take unlimited risk, so when big investors or the smart money shorts a stock, people take notice. They try to unearth the red flags that may have prompted the high short interest.
We decided to dig deeper and try to find out where smart money sees trouble ahead. To come up with our list of 20 underperforming stocks targeted by short sellers, we looked at the worst-performing stocks of the last six months and then ranked them by the short interest.
20. PBF Energy Inc. (NYSE:PBF)
Short interest: 13.96%
6 months’ performance: -49.44%
PBF Energy Inc. refines and supplies petroleum products. It generates its revenues through the Logistics and Refining segments. The company produces ultra-low-sulfur diesel, diesel fuel, gasoline, heating oil, lubricants, jet fuel, and petrochemicals.
In the latest quarterly earnings announced last week, the firm recorded a net loss of $3.09 per share, a bigger loss than the $2.82 reported in the previous quarter. Cash flows took a double hit, first due to a $330 million working capital requirement and then due to a higher inventory resulting from refinery downtimes.
In 2025, the company anticipates operating costs to increase slightly to $7.20 per barrel. PBF Energy needs a crack spread of $10 per barrel to break even its free cash flow. However, as per the guidance, the company is unlikely to deliver profitability anytime soon. Due to the higher natural gas prices, the firm’s guidance targets may be at risk. The company is at the risk of facing additional challenges due to the further gas price rise driven by potential demand growth in 2025.
19. Choice Hotels International, Inc. (NYSE:CHH)
Short interest: 14.22%
6 months’ performance: -33.6%
Choice Hotels International, Inc. is a hotel franchisor. The company operates in two segments: Hotel Franchising & Management and Corporate & Other. It franchises lodging properties under the Comfort Suites, Sleep Inn, Econo Lodge, WoodSpring Suites, Comfort Inn, Radisson RED, and other brand names.
The firm reported strong Q4 results, beating management’s earnings guidance. Choice Hotels grew its net income by 16% and diluted EPS by 22%. Adjusted EBITDA set a new benchmark of growing 12% YoY. The leisure & business travel segment led a significant growth, with business travel accounting for 40% of the overall mix.
Despite solid earnings, the company’s 2025 outlook raises concerns. As per the guidance, projected net income for 2025 is $288-300MM with adjusted EBITDA ranging between $625-$640MM. However, achieving these targets is challenging due to the current economic uncertainty. Business travel growth may be impacted due to potential government layoffs and ongoing business uncertainty.
The company also offers the possibility for guests to earn airline miles, but the recent poor guidance by Delta Air Lines means these rewards are also unlikely to attract customers.
18. Magnolia Oil & Gas Corporation (NYSE:MGY)
Short interest: 14.36%
6 months’ performance: -17%
Magnolia Oil & Gas Corporation operates as an independent natural gas and oil company. The company develops, acquires, explores, and produces natural gas, oil, and natural gas liquids reserves. Its properties are located mainly in the Giddings area and Karnes County.
The company’s short interest may be high, but it is trending downwards. Since October 2024, it has come down from 18.4% to 14.36%. This presents a possible short squeeze opportunity backed by improving fundamentals.
MGY planned spending of nearly half a billion dollars on drilling and completions this year is likely to result in a 5% to 7% production growth. On top of this, efficiency improvements will result in more wells being drilled for the same cost. The company is unhedged and fully exposed to commodity prices as part of the management’s strategy. This could go either way for investors, but if it favors the company, the probability of a bull rally triggered by short covering is quite high.
17. MGP Ingredients, Inc. (NASDAQ:MGPI)
Short interest: 14.59%
6 months’ performance: -50.26%
MGP Ingredients, Inc. operates as a supplier and producer of branded spirits, distilled spirits, and food ingredients. The company generates its revenue through Ingredient Solutions, Distillery Solutions, and Branded Spirits segments.
The US spirits industry has gone through challenges in 2024. According to The Distilled Spirits Council of the United States, increased spending on essentials like healthcare and housing, and poor sales performance of super premium liquors, drove the decline.
The company experienced headwinds last year with a 16% revenue decline. However, MGPI managed to slightly enhance its gross margins to 41% from 39.6%. Based on the guidance, 2025 seems to be another challenging year with an expected revenue decline of approximately 20%!
Although the firm is less vulnerable to tariff impacts due to its limited exposure to international sales, the little possible impact cannot be neglected when the company is already struggling. Shifting consumer preferences mainly among youngsters also pose long-term challenges for the overall industry.
16. Powell Industries, Inc. (NASDAQ:POWL)
Short interest: 14.69%
6 months’ performance: -28.08%
Powell Industries, Inc. is a designer, manufacturer, developer, seller, and service provider of custom-engineered equipment and systems. Its key products include custom-engineered modules, medium-voltage circuit breakers, integrated power control room substations, switches, and other products.
The company outperformed in the previous fiscal year, doubling its revenue and achieving gross margins of 27%. The company operates in a market that has historically had narrow profit margins of about 16 to 18% and is highly cyclical, so the firm made the best use of high demand.
Despite the stellar performance, Powell Industries faces potential risks from trade war uncertainties and a US economic slowdown, as it could cause project delays, resulting in reduced demand. The company operates in a competitive market, which could create price challenges from larger players after supply normalizes. Delays in projects like LNG and emerging technologies like carbon capture products could affect its earnings estimates as they are the main demand drivers for the firm.
15. Delek US Holdings, Inc. (NYSE:DK)
Short interest: 14.72%
6 months’ performance: -23.47%
Delek US Holdings, Inc. operates a downstream energy business. It generates its revenue through the Logistics and Refining segments. The company serves independent refiners, government, oil companies, distributors, independent retail fuel operators, transportation companies, and others.
2024 proved to be a tough year for the company. It reported a 28.18% YoY annual revenue decline accompanied by a 10.5% YoY cash balance decrease. Delek‘s EBITDA went down by 108.96% YoY, indicating a significant decline. Although DK is focused on increasing cash flows in FY 2025, considering current conditions, it seems a bit challenging for the company.
The firm reiterated its 2025 guidance on the earnings call yesterday. For now, the company is focused on improving cash flows through cost controls and operational improvements.
The firm has faced lower production margins per barrel of crude oil over the past few years, mainly in its El Dorado refinery. The company’s supply and wholesale segments are also struggling. Due to the decreasing demand trends, these segments generated a loss of approximately $34 million. The firm keeps expanding losses in the supply business, which is putting pressure on profits and encouraging traders to short the stock
14. Advance Auto Parts, Inc. (NYSE:AAP)
Short interest: 15.36%
6 months’ performance: -11.35%
Advance Auto Parts, Inc. operates as an automotive aftermarket parts provider. It provides brakes and brake pads, batteries and battery accessories, exhaust systems and parts, radiators and cooling parts, steering and alignment parts, belts and hoses, and other products.
The firm significantly improved its financial position in the latest quarter with $1.87 billion in cash. AAP reduced its net debt to $1.8 billion from $3.8 billion in Q3 2024, which further justifies its balance sheet strength. Additionally, the company took a restructuring initiative to close approximately 200 independent locations and 500 corporate stores. These closures are aimed at saving $60 to $80 million in annual costs.
Despite all these positives, there are no short-term catalysts for the company’s investors. Based on the guidance, Q1 does not seem encouraging. The firm expects about a 2% decline in same-store sales. The reality could be even worse for the company as tough macro conditions, coupled with a poor environment for auto stocks, are set to deal a double blow.
13. Winnebago Industries, Inc. (NYSE:WGO)
Short interest: 15.49%
6 months’ performance: -41.12%
Winnebago Industries, Inc. operates as a manufacturer and seller of marine products and recreation vehicles. It operates in Motorhome RV, Towable RV, and Marine segments. The company offers towable products, motorhome RVs, mobile office spaces, other specialty commercial vehicles, and various other products.
The firm delivered poor performance in the first quarter of fiscal year 2025. Revenue came in lower than estimates, declining by 18% year-over-year. This revenue decline was driven by lower prices to boost consumer demand and decreasing volumes sold in the RV category.
Regardless of sluggish sales in Q1, the company maintained its full-year guidance. This is because the business is highly seasonal and less profitable at this time of year. To decrease overhead expenses, Winnebago is cutting its production volume. The company is also consolidating production facilities for Class B RVs. This move is projected to increase long-term earnings. However, it may create short-term challenges for the company, which explains the high short interest.
12. Caleres, Inc. (NYSE:CAL)
Short interest: 15.71%
6 months’ performance: -49.56%
Caleres, Inc. is a developer, designer, manufacturer, sourcer, and seller of footwear. The company generates its revenue through the Brand Portfolio and Famous Footwear segments. It provides private-label, licensed, and branded athletic, dress, and casual footwear products.
The firm’s sales performance remained challenging, with Famous Footwear comparable sales down by 3% and Brand Portfolio sales down by 7%. Due to high fixed costs and lower sales, the company faces margin pressure. Caleres’ operating margins significantly declined to 2% in Q4 from 5%. For the full year, operating margins dropped by 5.8%.
The company’s capital allocation decisions highlight further risks. In 2024, the company prioritized shareholders’ returns instead of paying off debt. As a result, the amount of debt increased to $220 million from $190 million in the last year. The latest acquisition of Stuart Weitzman will further cost $105 million, increasing debt by 50%. Stuart Weitzman, which is an unprofitable brand, will require significant investment, which is likely to also pressure margins.
11. Monro, Inc. (NASDAQ:MNRO)
Short interest: 16.24%
6 months’ performance: -47.88%
Monro, Inc. operates automotive repair and retail tire stores in the U.S. The company provides automotive undercar repair services, replacement tires and tire-related services, and routine maintenance services. It offers its services to light trucks, vans, and passenger cars.
The firm missed its most recent quarterly revenue estimates with a revenue decline of 3.74% YoY. Comparable sales also went down by 0.8%. However, an improvement of 500bps was seen as compared to the previous quarter. Driven by higher material costs and promotional expenses, the operating and gross margins also decreased. Overall, the quarter did not end well for the company.
Macroeconomic challenges and proposed tariffs on vehicle imports continue to subdue the stock’s performance. Tariff complications will potentially lead to a rise in prices for vehicles and parts, affecting their sales and revenue.
10. Cable One, Inc. (NYSE:CABO)
Short interest: 16.28%
6 months’ performance: -21.62%
Cable One, Inc. engages in the provision of voice, video, and data services inside the United States. It offers the Sparklight TV service, a cloud-based digital voice recording service, and also helps boost wifi signals at home through its residential data services.
The reason shorts are attracted to a company like Cable One is because of the current industry trends. Wireless voice services are way more in demand now than residential video services. This shifting trend is quite visible in the company’s revenues, with residential video services down from 41% of total revenue 10 years ago to only 14% now.
This leaves the company to compete in the data services industry, which is a highly competitive niche. Its capital-intensive business was looking quite attractive till 2022, when neither revenues nor cash flows were going strong. However, a consistent decline in revenues and stabilizing cash flows point to an unattractive future. The share price has already dropped from $2100 to $174 in three and a half years and continues to go down with each passing quarter.
9. Guess Inc. (NYSE:GES)
Short interest: 16.38%
6 months’ performance: -34.57%
Guess Inc. makes apparel and accessories and sells them globally. The company’s stock is so undervalued that it has now become an M&A target! Last Thursday, a Bloomberg report suggested that Authentic Brands Global could take over the company at a price much higher than the $13 per share already offered by WHP Global. This has also increased the probability of a potential short squeeze.
The company announced its Q4 results in April and reported gross margins of 44%, down due to negative forex impact. Revenue grew at 8% in dollar terms, though a high inventory continues to cast a shadow on the management’s strategy. Going forward, the company expects revenue growth of anywhere between 3.9% and 6.2% in FY2026 as rag & bone as well as Middle East expansions start bringing in revenue.
The company’s Americas and Asia segments continue to disappoint, facing challenges like lower traffic and lower conversion rates. It will take some time for the management to deliver improvement, and going by the stock’s performance, investors do not seem to have the patience to wait for that.
8. Jack in the Box Inc. (NASDAQ:JACK)
Short interest: 17.09%
6 months’ performance: -51.48%
Jack in the Box Inc. is a franchisor and operator of quick-service restaurants. The company operates restaurants under the Del Taco and Jack in the Box brands. Its stock has lost half its value in the last six months, but a case could be made that the negatives are now well priced in.
The company is highly leveraged, which is why investors are betting against a turnaround. However, the debt has a long-term maturity, and the company is doing a good job of increasing its cash reserves while keeping debt stable.
JACK is also focusing on its franchise business to increase royalties and ensure stable cash flows. It is the Del Taco chain that is causing headaches, but the management has a different type of solution for this problem. A restructuring could be on the cards, and a complete divestiture of the business isn’t being ruled out either. The firm could generate $200 million with a possible sale, which is a far cry from the $585 million it paid to take the business private in 2022.
7. Designer Brands Inc. (NYSE:DBI)
Short interest: 17.14%
6 months’ performance: -50.27%
Designer Brands Inc. operates as a producer, designer, and retailer of footwear and accessories. The company generates revenue through Brand Portfolio, U.S. Retail, and Canada Retail. It provides casual, dress, and athletic footwear and accessories.
For the first time in over two years, the firm reported positive comparable sales. Although sales grew slightly by 1%, it is important to notice that the long downtrend finally reversed. The major driver of this turnaround was the U.S. Retail segment posting a 0.7% growth after so long. Despite sales growth, margins remain a major concern as the growth is mainly coming from the branded athletic footwear segment, which generates significantly lower margins.
The company’s shift towards athletic brands like New Balance and Nike may have lowered overall gross margins, too. It remains in a challenging financial position without solid margin expansion. With debt and annual interest expense amounting to 70 to 80% of its operating income, the short continues to be heavily shorted. A recession could make matters significantly worse.
6. Dine Brands Global, Inc. (NYSE:DIN)
Short interest: 17.68%
6 months’ performance: -34.93%
Dine Brands Global, Inc. operates as an owner, franchisor, and operator of restaurants. It operates in the company restaurant operations, Rental operations, Franchise operations, and Financing operations segments.
The firm’s Q4 2024 quarterly earnings shattered investor sentiment, something that didn’t significantly improve after yesterday’s Q1 2025 earnings call either. The company reported a 4.1% revenue growth, which finally broke the 7-quarter falling revenue streak. EOS came in at $1.03, missing estimates by $0.21 while revenue clocked in at $214.8 million, missing estimates by $0.29 million.
As per the guidance, the management expects the Applebee’s same-store sales growth in a range of -2% to 1% year-over-year. IHOP same-store sales are anticipated to be between -1% to 2% year-over-year.
5. Xerox Holdings Corporation (NASDAQ:XRX)
Short interest: 17.98%
6 months’ performance: -58.46%
Xerox Holdings Corporation is a workplace technology company. It integrates hardware, software, and services for enterprises. XRX is a developer, designer, and seller of document systems, services, and solutions. The company operates in the Xerox Financial Services (XFS) and Print and Other segments.
2024 proved to be a challenging year for the company. Driven by a continuing decline in its core print business, Q4 revenue dropped by 8.6% YoY. Despite a slight revenue beat supported by ITsavvy contributions, organic growth remained negative, with the core revenue falling 10.2% YoY in constant currency.
The company’s planned acquisition of Lexmark is also raising concerns. One of the major concerns regarding this acquisition is that it is funded by an additional $1.4 billion in debt. If they can implement the acquisition successfully, it could drive a bullish market outlook and short-term EPS growth. However, if the execution fails, it could worsen the financial position of the firm. Another key risk is that the print industry is experiencing an overall decline. Taking on more debt in such a situation is attracting shorts to the stock.
4. Oxford Industries, Inc. (NYSE:OXM)
Short interest: 18.64%
6 months’ performance: -32.04%
Oxford Industries, Inc. operates as an apparel company. The company markets, designs, sources, and sells lifestyle products. It provides women’s and men’s sportswear and related products. It sells its products under the Tommy Bahama brand.
After reporting disappointing Q4 results and issuing lower-than-expected guidance, OXM was downgraded by Citi to Sell. As a result, shares fell by 14.4% to a new 52-week low of $53.85.
The company recorded a 3.3% year-over-year revenue decline during the fourth quarter. Operating and gross margins also contracted significantly. Operating margins were down by approximately 460 basis points, marking a notable decline.
Based on the earnings, the management presented weak guidance for FY 2025. As per the guidance, comparable sales are projected to drop by 2% to 4%. On the back of reduced consumer spending, the challenging trends are likely to continue.
CEO Tom Chubb warned:
We believe the challenging trends experienced in January that accelerated into February are likely an indicator of what we can expect in the first half of fiscal 2025.
3. Northern Oil and Gas, Inc. (NYSE:NOG)
Short interest: 19.88%
6 months’ performance: -33.9%
Northern Oil and Gas, Inc. operates as an independent energy company. The company acquires, develops, explores, exploits, and produces natural gas and crude oil properties. The company’s stock is down 36.28% in the last 6 months, with a short interest of 19.88%.
NOG has just announced its Q1 earnings, reporting production of 135,000 BOW per day. Gas production, which comprises 42% of the total production mix, grew 14% YoY and 6.5% QoQ. The firm expects 2025 CepEx to be between $1.05 billion and $1.2 billion, with a vast majority of this amount reserved for maintenance expenditures.
CEO Nick O’Grady has previously emphasized Northern’s focus on long-term growth by saying:
The company’s strategy to prioritize long-term growth over short-term metrics, explaining a shift in the Uinta program to implement larger, optimally spaced 3-mile laterals, which will push volumes later into the year but improve capital efficiency.
2. Clear Secure, Inc. (NYSE:YOU)
Short interest: 20.24%
6 months’ performance: -29.91%
Clear Secure, Inc. operates a secure identity platform mainly in the United States under the CLEAR brand name. It also provides CLEAR Plus and CLEAR mobile app as well as CLEAR1, TSA PreCheck Enrollment Provided by CLEAR, RESERVE powered by CLEAR, Sora ID, Home to Gate, and a virtual queuing technology. The stock is down 28.51% in the last 6 months, with a short interest of 20.24%.
The company reported an impressive growth in Q4 2024 earnings. Revenues grew by 20.7% compared to the same period last year. With profit margins standing at 56%, the quarter ended with a remarkable 64.9% free cash flow margin.
Despite strong earnings, concerns remain around decreasing CLEAR Plus usage and member retention in case a recession occurs. Another major risk is that the company is heavily dependent on travel demand, which can drop during economic downturns. If travel demand declines, it will affect the member retention and addition negatively. Recent price increases may increase revenue, but they also pose the risk of driving away customers if they resist the price change.
1. Kohl’s Corporation (NYSE:KSS)
Short interest: 41.87%
6 months’ performance: -62.94%
Kohl’s Corporation is an omnichannel retailer in the United States. The company provides footwear, beauty products, apparel, accessories, and home products. It sells its products under the Apt. 9, Jumping Beans, Croft & Barrow, Sonoma Goods for Life, Tek Gear, and SO brand names. The stock is down 63.17% in the last 6 months, with a short interest of 41.87%.
The recent tariffs announcement has significantly raised the risk of a recession As a result, most analysts have become bearish on the stock due to projected demand contraction and high inventory levels.
As per the guidance, the management expects a 5% to 7% sales decline in FY 2025. To boost sales, the company would need to raise promotions, which is likely to pressure gross margins. However, this guidance was released before the tariff implementation announcement, so it does not include the potential tariff impacts. The company expects gross margin expansion of 30 to 50 bps, which is quite challenging considering the current state of the company and the economy.
While we acknowledge the potential of KSS as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than KSS but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
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