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One objective of retail investors is to gain from betting on stocks that are being discussed on numerous social media platforms and might experience a short squeeze. However, while short squeezes can lead to eye-popping rallies in many stocks, those companies that have weak business models or other fundamental weaknesses should eventually see a pullback.
Short squeeze candidates Support.com Inc. (SPRT) and SCWorx Corp. (WORX) seem to have garnered significant attention lately in the ongoing retail trading frenzy. However, due to their weak financials and bleak growth prospects, these stocks are overvalued at their current price levels. Hence, we think they are best avoided now.
