These 3 Stocks Are Primed for a Short Squeeze Surge in 2025

Retail traders are once again stirring the pot in heavily shorted small-cap stocks, a familiar pattern for those who watched the explosive rallies of past years. While the chaos of earlier meme-driven runs has cooled, the ingredients for another breakout—thin floats, elevated short interest, and sudden spikes in trading volume—are quietly reassembling.

A number of lower-priced names with unusually large short positions have started to show unusual movement on the tape. Many trade under $20 a share and sit in the sub-$2 billion market cap range, making them ideal setups for volatility.

Among the crowd of speculative plays, three stocks have emerged with heavy bearish pressure—and growing attention from opportunistic traders.

Airsculpt Technologies (NASDAQ: AIRS)

Market Cap: $388.5 million
Short Interest: 53.1%
YTD Performance: +13.9%

Airsculpt Technologies, which operates under the Elite Body Sculpture brand, specializes in minimally invasive fat-removal procedures using its proprietary AirSculpt® method. The company offers cosmetic body contouring for clients seeking alternatives to traditional liposuction.

Despite modest share price gains this year, Airsculpt is deeply shorted — more than half of its float is currently held in short positions. That’s the highest level among all qualifying stocks. The stock fell sharply after its second-quarter earnings miss and the announced retirement of its long-serving CFO, Dennis Dean. Over the past nine quarters, the company has only posted one earnings beat.

Management maintained its 2025 guidance, projecting revenue between $160 million and $170 million, and adjusted EBITDA of $16–18 million. But analysts remain cautious. With just three covering the stock, all have issued a “Hold” rating. The average target price stands at $4.50, suggesting that even with the current price premium, few expect near-term upside based on fundamentals alone.

However, in a market increasingly driven by positioning and sentiment — not just fundamentals — the sheer level of short interest may be enough to attract momentum traders.

The Children’s Place (NASDAQ: PLCE)

Market Cap: $106.5 million
Short Interest: 50.2%
YTD Performance: –56.6%

A familiar name for U.S. shoppers, The Children’s Place has been in retail since 1969, but its business has shrunk dramatically in recent years. Known for mall-based children’s clothing, the company also owns brands like Gymboree and PJ Place. But weak demand, rising costs, and store closures have left the retailer under considerable stress.

Net losses widened in the most recent quarter, with a 9.6% year-over-year revenue decline. The company posted a loss of $1.52 per share for Q1 2025, deeper than the prior-year figure of $1.18. Store count also dropped to 495 locations — down from 518 a year ago. Despite a narrowing of net cash outflow from operations, the company remains under pressure with just $5.7 million in cash and over $350 million in short-term debt.

Wall Street coverage is thin. Only one firm currently tracks PLCE, assigning it a “Hold” rating with a $6 target — implying limited upside, but no strong case for a rebound either. Still, the short interest above 50% puts the stock squarely on the radar of traders seeking short squeeze opportunities, particularly given the historically thin float and limited analyst oversight.

Zenas Biopharma (NASDAQ: ZBIO)

Market Cap: $657.2 million
Short Interest: 50.1%
YTD Performance: +88.2%

Zenas Biopharma may be the least familiar name on this list, but it’s also the one showing the clearest signs of investor confidence beyond just technical setups. The company is a clinical-stage biotech firm focused on immunology and autoimmune treatments. Its pipeline, while early-stage, has attracted attention from analysts and institutions alike.

ZBIO’s public trading history is short — the company listed in late 2024 — and its earnings history is limited. In its first full quarter as a public firm, Zenas posted $10 million in revenue and a narrower-than-expected loss of $0.80 per share (analysts had expected –$1.13). Operating cash burn grew to $37 million in Q1, but the company ended the quarter with a substantial cash reserve of $196.5 million — easily covering its short-term liabilities.

Unlike the other two names, Zenas carries strong analyst support. All six firms covering the stock have issued a “Strong Buy” rating. The consensus target price is $32.33, representing an upside of more than 100% from current levels.

With a legitimate product pipeline, deep funding, and a sizable short interest, ZBIO stands out as a potential battleground between bears betting on delay and dilution, and bulls positioning for clinical trial momentum.

Low caps, high risk, rising interest

Each of these companies — Airsculpt Technologies, Children's Place, and Zenas Biopharma — reflects a different kind of pressure point in today’s market. One is navigating weak earnings amid executive turnover. Another is carrying heavy debt against shrinking retail space. The third is a clinical-stage biotech with no profits, but plenty of investor speculation.

What ties them together isn’t sector or strategy, but structure: all three sit below $20 per share, have modest market caps, and are among the most heavily shorted stocks in the public market. For investors tracking short interest as a signal, these names are already showing early signs of elevated volatility. Whether that translates into sustained moves or fleeting spikes depends less on sentiment — and more on what shows up in the next earnings call, product update, or 13F filing.

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