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The Most Shorted Stocks Heading into 2025: Kohl's, CRISPR, BigBear.ai, and Implications for the S&P 500

In the high-stakes world of stock trading, short selling remains one of the most intriguing and risky strategies. Investors who short a stock are essentially betting that its price will decline, borrowing shares to sell them high and buy them back low to pocket the difference. High short interest in a stock often signals widespread pessimism among traders, potentially driven by concerns over a company's fundamentals, industry headwinds, or broader economic factors. As we approach 2025, several stocks have emerged as prime targets for short sellers, reflecting uncertainties in retail, biotechnology, and artificial intelligence sectors. Among the most notable are Kohl's Corporation (KSS), CRISPR Therapeutics (CRSP), and BigBear.ai Holdings (BBAI). These companies not only top the lists of heavily shorted equities but also offer insights into potential market volatility ahead, particularly within the broader S&P 500 index.

Starting with Kohl's, the department store giant has become a magnet for short sellers amid ongoing struggles in the retail landscape. With short interest hovering around 30% of its float—meaning nearly a third of available shares are being shorted—Kohl's exemplifies the challenges facing traditional brick-and-mortar retailers. The company has grappled with declining foot traffic, fierce competition from e-commerce behemoths like Amazon, and shifting consumer preferences toward discount and online shopping. Recent quarters have shown inconsistent sales figures, with same-store sales fluctuating and profit margins squeezed by inflationary pressures on inventory and supply chains. Short sellers argue that Kohl's outdated business model, heavy reliance on promotional pricing, and vulnerability to economic downturns make it a prime candidate for further declines. For instance, if consumer spending tightens in 2025 due to persistent inflation or rising interest rates, Kohl's could see even sharper revenue drops. However, optimists point to potential turnaround strategies, such as partnerships with brands like Sephora or expansions into home goods, which might stave off the bears. Still, the high short interest suggests that many investors are wagering on continued erosion, potentially leading to a short squeeze if positive news emerges unexpectedly.

Shifting to the biotech sector, CRISPR Therapeutics stands out with short interest exceeding 20% of its float. This company is at the forefront of gene-editing technology, leveraging the revolutionary CRISPR-Cas9 system to develop treatments for genetic disorders like sickle cell disease and beta-thalassemia. Its flagship therapy, Casgevy, recently gained regulatory approvals in several markets, marking a significant milestone. Yet, short sellers remain skeptical, citing the high costs of development, regulatory hurdles, and competition from other gene-therapy players like Bluebird Bio or Vertex Pharmaceuticals. CRISPR's stock has been volatile, surging on clinical trial successes but plummeting on setbacks or broader market sell-offs in biotech. Critics highlight the company's substantial cash burn rate—it's not yet profitable—and the long timelines required for widespread adoption of its therapies. In a 2025 landscape where healthcare spending could face scrutiny amid budget constraints, short positions might intensify if trial data disappoints or if patent disputes arise. On the flip side, breakthroughs in areas like cancer treatments could trigger a rally, forcing shorts to cover and driving prices higher. The interplay here underscores the speculative nature of biotech investing, where scientific promise often clashes with financial realities.

Another standout is BigBear.ai, a player in the burgeoning artificial intelligence and data analytics field, with short interest also around 20-25% of its float. This company provides AI-driven solutions for defense, intelligence, and commercial sectors, including predictive analytics and decision-support tools. Despite the AI boom fueled by advancements like ChatGPT and machine learning, BigBear.ai has faced skepticism due to its relatively small market cap, inconsistent revenue growth, and dependence on government contracts. Short sellers point to execution risks, such as delays in contract wins or integration challenges with legacy systems, as well as broader concerns about an AI bubble bursting. The stock has experienced wild swings, often tied to hype cycles in tech, but underlying fundamentals reveal a company still scaling up amid fierce competition from giants like Palantir or IBM. Looking ahead to 2025, if AI adoption accelerates in enterprise settings, BigBear.ai could benefit from increased demand; however, economic slowdowns or regulatory scrutiny on data privacy might exacerbate short pressures. The high short interest here reflects a divide: bulls see untapped potential in AI's transformative power, while bears anticipate overvaluation corrections.

These individual stories tie into larger trends affecting the S&P 500 as a whole. The index, which tracks the performance of 500 large-cap U.S. companies, has seen elevated short interest in various sectors, driven by macroeconomic uncertainties. Analysts project that in 2025, the S&P 500 could face headwinds from geopolitical tensions, such as ongoing trade disputes or energy market volatility, alongside domestic issues like Federal Reserve policy shifts. Short sellers are particularly active in consumer discretionary, healthcare, and technology segments, mirroring the profiles of Kohl's, CRISPR, and BigBear.ai. Overall short interest in the S&P 500 has ticked up in recent months, signaling caution amid record highs achieved in 2024. This could portend increased volatility, with potential for short squeezes—rapid price surges as shorts cover their positions—in stocks with high borrow rates.

Investors should note that while short selling can highlight undervalued opportunities for contrarians, it also carries significant risks. A short squeeze, as seen in meme stock phenomena like GameStop, can lead to massive losses for bears. For 2025, the outlook suggests a bifurcated market: sectors like AI and biotech might offer growth but with high risk, while retail faces structural declines. Monitoring short interest data from sources like S3 Partners or Nasdaq can provide early warnings. Ultimately, these most-shorted stocks serve as barometers for investor sentiment, reminding us that in the stock market, pessimism can sometimes pave the way for unexpected rebounds. As economic indicators evolve—be it GDP growth, unemployment rates, or corporate earnings—traders will adjust their bets accordingly, shaping the narrative for the year ahead.

In summary, the persistence of high short interest in names like Kohl's, CRISPR, and BigBear.ai highlights sectoral vulnerabilities but also opportunities for those willing to bet against the crowd. With the S&P 500 potentially entering a more turbulent phase in 2025, understanding these dynamics is crucial for navigating what could be a pivotal year in equities. (Word count: 928)

Read the Full Business Insider Article at:
[ https://www.businessinsider.com/most-shorted-stocks-kohls-crispr-big-bear-ai-sp500-2025-7 ]