DFLI Plunges 11.35% as Short Interest Surges 143% on Bearish Bets

Dragonfly Energy (DFLI) plunged 11.352% in pre-market trading on November 21, 2025, signaling heightened short-selling pressure and investor pessimism. The sharp decline followed elevated short interest metrics, with 13.86 million shares sold short—representing 16.87% of the public float, a 143% surge from the prior report. The short interest ratio (days to cover) stands at 0.5, indicating rapid potential for a short squeeze if the stock rallies.

The stock’s short squeeze risk remains elevated, with a 54.43% off-exchange short volume ratio and a 9.7% short borrow fee rate. These figures suggest aggressive bearish positioning, particularly through dark pool trading. Recent data also highlights a 16.87% short float, far exceeding industry peers, which heightens vulnerability to sudden price reversals. The sharp pre-market drop could reflect forced liquidation or margin calls amid tightening short coverage.

Historically, DFLI’s short interest has been volatile, with October’s 13.86 million short shares reflecting a dramatic increase from 5.7 million in the previous period. This surge aligns with broader market trends in short-heavy sectors, though DFLI’s exposure remains outlier-level. The stock’s technical profile now faces critical support levels, with a potential rebound triggering short-covering cascades. However, sustained bearish sentiment could prolong the downturn if fundamental risks materialize.

Backtest Hypothesis: A mean-reversion strategy targeting DFLI’s recent selloff could capitalize on short-covering dynamics. A 10-day moving average crossover with a 50-day trend filter might identify entry points during oversold conditions. Given the 16.87% short float, a 5-10% rebound could trigger a self-reinforcing rally. Position sizing should account for volatility, with stop-loss orders below key support levels to mitigate further downside risks.