3 Heavily Shorted Stocks That Could Prove the Bears Wrong

Short interest provides a key look at how some investors bet on a stock’s epic downfall. Specifically, the percentage of a company’s floated shares sold short provides a tangible look at how strong that sentiment is. 

Below, we’ll detail three stocks with a large percentage of their floated shares sold short, indicating significant bearishness by some investors. We’ll also provide counterarguments, detailing what short sellers may be missing regarding these names.

RIVN Faces Sink or Swim Moment With the R2

First up is electric vehicle (EV) stock Rivian (NASDAQ: RIVN). Like many EV stocks, Rivian has had a difficult time consistently adding market value. This comes as building a profitable EV company is extremely difficult. Only three firms, Tesla (NASDAQ: TSLA), Li Auto (NASDAQ: LI), and BYD (OTCMKTS: BYDDY), have done so. Rivian still has trouble consistently posting a positive gross margin. That means that the company typically sells its vehicles for less than the cost of materials and labor used to make them.

Add corporate employees, salespeople, and research and development costs, and things look even worse. The company posted an operating margin of -83% last quarter, showing that it is nowhere near profitable. That is likely a key reason why the percentage of the stock’s shares sold short comes in at a whopping 19.5%. 

The company has a pattern of losing hundreds of millions of dollars a quarter, and it can’t continue this pattern forever.

However, there is one key reason why Rivian could prove the short sellers wrong: it’s coming R2 vehicle. The R2 is Rivian’s second consumer vehicle, improving upon the R1 in the most critical area: cost.

Rivian has already locked in the R2’s materials costs at 50% below those of the R1.

The success of the R2 could go very far in moving Rivian toward profitability. Still, even if the R2 is less expensive, it won’t turn Rivian around unless it is a big hit with car buyers. Whether that will happen is a key part of the debate raging between bulls and short sellers.

Short Sellers Target TEM Despite Tangible Results

Next up is one of the newest names in healthcare, Tempus AI (NASDAQ: TEM). The short interest in this stock hasn’t come from its inability to gain value or post strong financial results. Since going public in June 2024, the stock has been up approximately 88% year-to-date.

The firm has posted strong revenue growth and is making consistent progress in becoming profitable. However, investors have sold short nearly 26% of Tempus’s floated shares. Short reports allege that Tempus simply put “AI” in its name to attract attention, even though AI applications make up a very small percentage of the company’s revenue.

The company’s AI-specific revenues are indeed small at this point. However, one cannot deny that the company has been growing its key segments, genomics, data, and services, at strong clips since going public. 

Notably, 19 of the world’s top 20 pharmaceutical companies use Tempus data to enhance their drug research capabilities. Overall, this information shows that Tempus is clearly providing real value in the fast-growing precision medicine market.

MP’s Surge Drives Short Interest, But 2 Key Factors Are on Its Side

Last up is MP Materials (NYSE: MP). Based on valuation alone, it's not hard to see why investors have sold short over 17% of the company’s floated shares. MP Materials has surged by more than 350% in 2025, even though the company has posted negative adjusted earnings per share for seven quarters. 

However, MP Materials benefits from two key factors: the increasing importance of rare earth metals and government support. MP operates the only “active and significant" rare earths mine in the United States.

The Department of Defense (DoD) also takes a 15% stake in MP, making it the company’s largest shareholder. These factors support the company’s ability to become an increasingly important part of the economy and to become profitable.

Short Interest and Positive Developments: A Balancing Act for Investors

Overall, short interest is one indicator that investors should pay attention to. This signal requires balancing with the tangible factors that currently aid or can aid a company in the future. For RIVN, TEM, and MP, there is notable weight in both the bullish and bearish arguments surrounding these names.

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The article "3 Heavily Shorted Stocks That Could Prove the Bears Wrong" first appeared on MarketBeat.