High demand from short sellers and limited supply have sent the cost to borrow shares of startup Nikola Corp. soaring, making a short squeeze increasingly likely.

Borrow fees jumped above 600 per cent of the stock price on Monday, making it by far the most expensive U.S. stock to short, according to financial data firm S3 Analytics. Tesla Inc., another maker of alternative fuel vehicles that’s a popular short seller target, costs just 0.3 per cent per year to borrow.

Nikola Corp., which is developing hydrogen fuel cell-powered semi trucks, has nearly doubled since debuting on the Nasdaq June 4 via a reverse merger. The rapid gains and forecasts for zero revenue in 2020 has attracted legions of skeptics. Short sellers are down nearly US$250 million in mark-to-market losses in June, according to S3.

The combination of rising share prices and exorbitant fees are making the bet increasingly untenable, said S3’s Ihor Dusaniwsky, managing director for predictive analytics.

“Any time you have rates above 100 per cent you’re hoping that the stock falls precipitously in a very short term so you don’t have to pay a full year’s financing costs,” he said. If the stock “continues to trend upwards we should expect a short squeeze."