Introduction: Why JPMorgan’s Call Matters

When JPMorgan issues research notes highlighting opportunities in the market, investors tend to listen. The bank's combination of quantitative research, industry expertise, and market influence means its analysis often sets the tone for broader conversations on Wall Street. Recently, JPMorgan flagged three stocks—Cipher Mining, TeraWulf, and Nuvation Bio—as candidates for a potential short squeeze. For retail traders, this kind of signal can feel like a green light, while for institutional investors, it represents a warning sign of possible volatility ahead.

Short squeezes have become an iconic part of modern market narratives, especially since the GameStop frenzy in early 2021. As JPMorgan explains, the recipe for a squeeze requires two core ingredients: strong retail demand and high short interest from institutional players. When these forces collide, short sellers may be forced to buy back shares quickly, pushing prices sharply higher. According to Business Insider, these dynamics are beginning to form around the three stocks in question.

The Mechanics of a Short Squeeze

To appreciate JPMorgan’s analysis, one must first understand the mechanics of a short squeeze. A short sale occurs when an investor borrows shares to sell them, betting the price will decline. If the stock price rises instead, the short seller must cover their position, which means buying back the stock at a higher price. This creates additional upward momentum, often catching other short sellers in a cascading effect.

In recent years, retail investors have been keen to exploit this phenomenon, often coordinating through platforms like Reddit’s WallStreetBets or using sentiment trackers. JPMorgan’s identification of Cipher, TeraWulf, and Nuvation Bio suggests these names now exhibit the hallmarks of such a setup.

Cipher Mining: Retail Favorite with Crypto Exposure

Cipher Mining stands out as the most retail-driven name among the three. According to JPMorgan’s data, retail investors purchased $14.2 million of Cipher stock in a single week, a substantial vote of confidence for a company operating in the volatile crypto-mining industry. Shares have already surged more than 160% year-to-date, underscoring the appetite for risk among certain investor groups.

Despite the enthusiasm, Cipher faces challenges. As JPMorgan notes, the firm has dealt with weaker mining revenue and earnings in the second quarter of 2025. Furthermore, short interest sits around 20% of float, which remains elevated even after a recent decline. These conditions create fertile ground for a short squeeze should momentum persist.

"This renewed buying comes despite elevated short interest (~20% of float) and softer 2Q 2025 mining revenue and earnings." – JPMorgan Analyst Arun Jain

Cipher’s exposure to cryptocurrency markets adds an extra layer of volatility. Positive news, such as the recent announcement of a Google investment in partnership with Fluidstack, briefly sent shares soaring 10% in premarket trading before they reversed course. This whiplash behavior is emblematic of short squeeze candidates and is precisely what JPMorgan is warning about.

TeraWulf: The Institutional Target

While Cipher has gained retail enthusiasm, TeraWulf is more heavily targeted by institutional short sellers. Roughly 40% of its float is sold short, making it the highest among the three stocks. For comparison, that figure dwarfs the 20% short interest in Cipher and the 28% in Nuvation Bio. JPMorgan points out that TeraWulf’s short interest has increased by 8% in just the past month.

Such a high level of short activity sets the stage for dramatic swings. If retail sentiment swings positive—similar to Cipher’s case—short sellers could be caught off guard. Already, TeraWulf stock has demonstrated this potential, having surged earlier in the year on news of a major deal. Though its sentiment has been more volatile and somewhat weaker than Cipher’s, the setup remains potent for a squeeze if buying pressure resurfaces.

Nuvation Bio: The Smaller but Significant Player

Nuvation Bio may not have the same retail popularity as Cipher or the institutional short targeting of TeraWulf, but it still represents part of the trio highlighted by JPMorgan. Its shares are up 15% year-to-date, a modest gain compared to the other two, but its short interest of 28% is substantial. This level of institutional skepticism leaves the stock vulnerable to sudden upward moves should retail investors turn their attention toward it.

While biotech companies often trade on catalysts like clinical trial results or regulatory approvals, the fact that Nuvation is now being monitored for short squeeze potential speaks to the breadth of the phenomenon. JPMorgan’s recognition of Nuvation highlights how short squeeze conditions can develop across sectors, not just in technology or crypto.

The Role of Retail Investors

The driving force behind potential short squeezes often comes down to retail investor enthusiasm. JPMorgan’s data shows retail traders were overwhelmingly bullish on Cipher last week, while sentiment for TeraWulf was more inconsistent and has declined recently. For Nuvation, the retail footprint is smaller but could grow if momentum shifts.

Social media plays a pivotal role in shaping these dynamics. Platforms like Twitter, Reddit, and Discord can rapidly amplify enthusiasm for stocks. Data from Swaggystocks indicates that positive sentiment around Cipher has been the most consistent over the past month. Such digital chatter often precedes sharp trading moves, reinforcing JPMorgan’s conclusion that these names could be squeezed higher under the right conditions.

Broader Implications for Markets

JPMorgan’s call is not just about three obscure stocks—it reflects a broader theme in modern markets. The rise of Retail investors as a counterforce to institutional short sellers have altered trading dynamics in ways that continue to reverberate. The phenomenon creates both opportunity and risk. On the one hand, retail investors can generate extraordinary returns by capitalizing on a squeeze. On the other hand, these trades often collapse as quickly as they rise, leaving latecomers holding significant losses.

Institutional investors must also adapt. Elevated short interest is no longer a purely quantitative metric; it now represents a potential vulnerability in a market where retail sentiment can swing violently and unexpectedly. JPMorgan’s highlighting of Cipher, TeraWulf, and Nuvation is as much a cautionary tale as it is an investment opportunity.

Conclusion: JPMorgan’s Warning for Investors

At its core, JPMorgan’s note underscores the delicate balance between retail enthusiasm and institutional caution. The three stocks—Cipher Mining, TeraWulf, and Nuvation Bio—each represent different facets of the short squeeze narrative. Cipher is the retail darling tied to crypto markets, TeraWulf is the heavily shorted institutional target, and Nuvation is the biotech outsider with significant short interest. Together, they paint a picture of a market still vulnerable to extreme volatility driven by crowd behavior.

For investors, the key takeaway is awareness. While the allure of quick profits from a short squeeze is undeniable, the risks are equally high. JPMorgan’s analysis provides a roadmap of where those risks and opportunities currently lie. Whether one views it as a call to action or a cautionary note, the presence of these dynamics confirms that short squeezes remain a powerful, unpredictable force in today’s financial markets.