|Bloomberg recently released information on heavily shorted stocks.|
One of those stocks was PolarityTE (PTE). The PTE technology uses a patient’s own cells and tissues to regenerate functionally-polarized human tissue – something that has never been done before.
The plausible reason for the high short position is that PTE still hasn’t generated a credible flow of revenue and because of that lack, it’s deemed to be a high-risk development company.
However, as of April 11, 2019, 75% of the company’s equity float has been shorted.
That’s a very high percentage and evokes a familiar adage . . .
“He who sells what isn’t his’n,
Must buy it back or go to prison.”
More to the point, if and when PTE releases some dramatic good news, the huge number of shorts would then have to compete with new buyers to cover their short positions.
Although prison is not a likely outcome, as prices rise shorts will either buy stock to cover their short positions or begin meeting higher and higher margin requirements.
For a stock that is currently trading below $10, going short seems like a high-risk bet.