General Motors' Rising Short Interest and Its Implications for 2026: A Contrarian Indicator and Short Squeeze Potential

In the world of investing, short interest often serves as a contrarian barometer. When pessimism peaks, it can create fertile ground for unexpected rallies-particularly if positive catalysts emerge. For General Motors (GM), the latest data on short interest as of December 2025 suggests a nuanced picture: while bearish sentiment has recently intensified, the stock's fundamentals and strategic positioning could set the stage for a short squeeze in 2026.

Short Interest: A Contrarian Signal

As of December 15, 2025, GM's short interest stood at 20.67 million shares, representing 2.23% of its public float. This marked a 9.39% increase from the prior reporting period, signaling a renewed wave of bearish bets. However, this figure contrasts with earlier data from October 2025, when short interest had declined by 9.9%, reflecting a prior period of improved investor sentiment. The recent uptick suggests that short sellers are once again positioning against GM, potentially underestimating its resilience.

The short interest ratio (SIR), or "days to cover," provides further insight. At 1.6 to 2.0 days, GM's SIR is relatively modest compared to stocks with higher ratios, which often signal greater short-squeeze risk. Yet, even a low SIR can become volatile if positive news triggers a rapid covering of short positions. For context, a SIR between 1 and 4 is typically seen as neutral to bullish, implying that short sellers may not be overly leveraged. However, the recent 9.39% rise in short interest could amplify the impact of a sudden price surge.

Catalysts for a 2026 Short Squeeze

The potential for a short squeeze hinges on catalysts that drive rapid buying interest. For GM, several factors could serve as triggers:

1. Earnings and Strategic Execution: Analysts have repeatedly highlighted GM's disciplined approach to cost controls and capital allocation. Mizuho upgraded its price target to $76 from $67 in late 2025, citing robust Q3 results and reduced tariff risks from onshoring efforts. Similarly, Barclays raised its target to $85, emphasizing GM's favorable positioning in 2026. Strong earnings reports or cost-cutting announcements could spark a rally, forcing short sellers to buy shares to cover their positions.

1. EV and Truck Profitability: GM's pivot toward profitable trucks and disciplined EV rollouts has drawn praise. Analysts at Morgan Stanley and J.P. Morgan maintain Overweight ratings, citing the company's ability to balance innovation with profitability. If GM outperforms expectations in these segments-particularly with its Hummer EV or new battery technologies-investor enthusiasm could accelerate.

2. Buybacks and Valuation: Aggressive share repurchases have bolstered GM's valuation. With a price-to-earnings ratio below industry peers, the stock appears undervalued to some analysts. If buybacks continue at a rapid pace, this could drive share price appreciation and pressure short sellers.

Historical Precedents and Risks

Historically, GM's short interest has rarely spiked to levels that trigger a full-blown squeeze. As of December 2025, the 2.23% short float is modest compared to stocks with 5% or higher short interest. However, past events offer cautionary tales. For instance, a 2024 joint charging initiative between GM and Tesla indirectly influenced short interest in EV-related stocks like Blink Charging, illustrating how strategic partnerships can ripple through markets. A similar event involving GM-such as a major EV breakthrough or a partnership-could reignite short-covering.

That said, risks remain. Some analysts, including BofA and Wells Fargo, warn of slowing EV demand and high warranty expenses. Additionally, valuation concerns persist, as GM's stock has traded at a premium to some peers. A slowdown in macroeconomic conditions or a shift in consumer preferences could dampen optimism.

Conclusion: Balancing Bearish Bets and Bullish Fundamentals

GM's rising short interest in late 2025 reflects a tug-of-war between bearish skepticism and bullish fundamentals. While the current short float is not extreme, the stock's strategic momentum and analyst optimism create a scenario where a short squeeze could materialize in 2026-particularly if positive catalysts emerge. Investors should monitor key metrics: earnings surprises, EV segment performance, and buyback activity. For now, the data suggests that short sellers may be underestimating GM's ability to navigate headwinds and capitalize on its strengths.