If 2021 taught the investing public anything, it’s that the potential of a short squeeze can easily outweigh the returns of a short position. Retail investors sent GameStop and other companies to the moon, pushing short sellers to their limit by forcing them to buy back shares to close their shorts which drove prices even higher. The new EquiLend Short Squeeze Score is designed to provide early warning signals of potential short squeezes, enabling short sellers and market participants to proactively mitigate risk and protect their portfolios.

The Short Squeeze Score is available across more than 50,000 unique equities in EquiLend’s suite of Data & Analytics Solutions, including DataLend, Orbisa and the Orbisa app on Bloomberg. The score incorporates existing data elements used by short sellers today combined with comprehensive securities finance data from EquiLend’s ecosystem. The score considers industry-wide P&L, demand ratios and other metrics to incorporate changes in liquidity and borrow cost within the securities finance market. Crucially, the Short Squeeze Score uses social media sentiment data to tap into the same sources that drove the major short squeezes of 2021.

The EquiLend Short Squeeze Score is built on a scale of 0 to 100. Scores between 0 and 30 identify a negligible or low probability of a squeeze event. Scores between 30 and 60 identify a medium probability of a squeeze event, suggesting market conditions in this security should be monitored. A high probability of a squeeze event would be classified with a score of 60 to 100, indicating to investors that immediate action is needed to mitigate risk.

The score is calculated daily for users to proactively adjust their strategies ahead of a significant market event and offset potential losses. Below are a handful of recent examples where the EquiLend Short Squeeze Score warned of potential short squeezes.