The firm's recommendation to short these companies comes as they fear possible blow-ups that could result in significant financial losses for investors. This warning serves as a precautionary measure for those looking to safeguard their investments in the face of uncertain market conditions.
Tesla and GameStop, two well-known companies in the tech and gaming sectors respectively, have been singled out by Wolfe Research for their perceived vulnerability to adverse market developments. Investors are advised to exercise caution and consider the firm's advice when making their investment decisions in these stocks.
Market Performance of Major Indices
As the broader market continues to surge, Wolfe Research has identified certain stocks that are standing out as potential candidates for short selling.
Last week, stocks recorded further gains on top of their already strong performance in 2025.
Nasdaq Composite Leads the Way
The Nasdaq Composite was the top performer last week, posting a 2.6% increase.
Weekly Gains of S&P 500 and Dow Jones Industrial Average
Following the Nasdaq, the S&P 500 and the Dow Jones Industrial Average also saw gains of 1.5% and 0.6%, respectively.
Positive Market Sentiment Despite Inflation Data
Despite higher-than-expected inflation figures, the market remained optimistic as investors perceived lesser pricing pressures.
President Trump's Tariff Plan
President Trump outlined a plan to impose reciprocal tariffs on goods from countries that impose levies on U.S. products, although the implementation was not immediate.
Identification of Overextended Stocks
Some stocks are being viewed as overextended to the upside, presenting potential opportunities for investors to take short positions.
Wolfe Research's "Short Hits" List
Wolfe Research highlighted a list of stocks that frequently appear on the firm's short ideas screens, including Tesla and GameStop.
Short Interest in Tesla and GameStop
Tesla and GameStop both featured on Wolfe's list, with Tesla having 2.3% short interest and GameStop with 7.9% short interest.
Stock Performance of Tesla and GameStop
Tesla shares have surged by almost 80% in the last year, while GameStop has seen a jump of over 90% during the same period.
Recent Performance of Tesla Shares
Tesla experienced some volatile trading days recently, with the stock ending the week with a 1.6% decline after several ups and downs.
GameStop's Positive Week
GameStop closed the week with a 9.2% gain, fueled by reports of potential investments in bitcoin and other cryptocurrencies.
U.S. Steel on Short Selling Radar
U.S. Steel was among the stocks identified by Wolfe Research, with a short interest of 12.8% of the company's float.
Trump's Tariff Announcement Impact
Following Trump's announcement of tariffs on steel and aluminum imports, U.S. Steel and other related companies experienced a boost.
Stock Performance of U.S. Steel
U.S. Steel shares rose by approximately 4% last week, despite a rough year that saw a 16% decline in the stock price.
