Retail Trading’s New Risk Cycle
Margin debt in U.S. brokerage accounts soared to a record $937 billion in January 2025, marking a 33% increase from the previous year—a clear indicator of escalating risk appetite among retail investors.
The rise of zero-commission trading apps and easy access to margin accounts has brought a flood of retail investors into the market. With it has come a familiar—and risky—pattern: excitement, heavy speculation, and the seductive but dangerous promise of outsized returns through leverage.
While borrowing to amplify gains can work in bull runs, it also exposes traders to brutal losses when momentum shifts. In today’s environment—defined by high volatility, social-media-driven sentiment, and rapid news cycles—those shifts happen faster and more violently than ever.
So which stocks are flashing the brightest red flags when it comes to retail overleverage? Using publicly available indicators like options activity spikes, margin exposure, retail ownership trends, and volatility, we’ve identified the seven most overleveraged stocks in the market right now.
If you’re a journalist covering market risk — or a trader trying to stay ahead of retail sentiment — these are the names you’ll want to watch closely.
Key Takeaways
- Margin debt hit a record $937B in January 2025 — a 33% year-over-year spike, driven by retail speculation.
- AMC and GameStop top the overleverage list with risk scores of 24/25 and 23/25 respectively, fueled by meme-trader call volume and high short interest.
- MicroStrategy’s Bitcoin exposure ranks it third, making it the most volatile crypto-correlated equity in the study.
- 45%+ of Carvana’s float is shorted, flagging it as a prime candidate for margin-fueled swings.
- All 7 tickers analyzed combine heavy retail ownership with speculative options activity — a classic setup for flash reversals and liquidation cascades.
Source: Leverage.Trading analysis of publicly available data from FINRA, S3 Partners, Yahoo Finance, and Nasdaq short interest reports.
Ranking the Most Overleveraged Retail Stocks
It’s not easy to get exact data on margin positions by stock, but there are clear signals that point to retail overexposure — especially when leverage is involved. To identify these stocks, we looked at five core indicators.
The Top Seven
Each category was scored from 1 (low risk) to 5 (extreme risk) for a maximum possible score of 25 points.
1. AMC Entertainment Holdings (AMC)
Retail Overleverage Score: 24/25
Why It’s Overleveraged: AMC is still a favorite for meme stock traders. Many investors are borrowing money to bet on the stock going up, even though the company’s movie ticket sales are falling and its finances are under pressure.
2. GameStop Corp. (GME)
Retail Overleverage Score: 23/25
Why It’s Overleveraged: GameStop is still riding the wave of hype from its meme stock days. Many everyday traders keep borrowing money to bet on another big price surge — even though the company’s actual business hasn’t grown much.
3. MicroStrategy Incorporated (MSTR)
Retail Overleverage Score: 22/25
Why It’s Overleveraged: MicroStrategy’s stock is extra risky because it depends heavily on Bitcoin’s wild price swings — and many traders are also borrowing money to bet on it, making it even more unstable.
4. Carvana Co. (CVNA)
Retail Overleverage Score: 21/25
Why It’s Overleveraged: Carvana attracts a lot of traders hoping for a quick price jump, and many are borrowing money to boost their bets. But the company’s shaky financial situation
makes it extremely risky.
5. Tesla, Inc. (TSLA)
Retail Overleverage Score: 20/25
Why It’s Overleveraged: Tesla has a lot of die-hard fans who borrow money to make short-term bets that the stock will go up. But if people’s feelings about the company change, the stock can drop quickly.
6. Coinbase Global, Inc. (COIN)
Retail Overleverage Score: 19/25
Why It’s Overleveraged: Coinbase gives stock traders an easy way to bet on crypto prices, but that means the risks are doubled. Big price swings and government regulation make it even more dangerous.
7. Beyond Meat, Inc. (BYND)
Retail Overleverage Score: 18/25
Why It’s Overleveraged: Beyond Meat’s stock jumps around a lot when people get hopeful about a comeback. But the company’s weak financials and lots of bets against it make it very risky for traders who are borrowing money to invest.
Why Leverage is Spiking Again
After a slowdown in 2022 and early 2023, margin usage among retail traders is surging once again. Lower rates, renewed tech optimism, and the reawakening of meme-stock culture have encouraged many investors to take on even greater risk.
The surge in margin debt this year suggests speculative trading is making a comeback. While leverage amplifies gains, it can also leave traders wide open if sentiment sours.
Pair that with a wave of retail enthusiasm on sites like Reddit, YouTube, and Discord, and you have a perfect storm for inflated stock positions backed by borrowed money.
The Verdict: Invest with Caution
Retail trading has revolutionized market dynamics, but it has also amplified volatility and risk. When speculative fever meets easy leverage, collapses happen fast, especially in the most volatile, crowded names.
If you’re trading in any of these stocks:
- Understand your leverage exposure clearly.
- Use hard stop-loss levels.
- Size your positions defensively.
- Focus on risk management, not just upside dreams.
At the end of the day, in a market fueled by hype and heavy borrowing, it’s not the loudest or most aggressive traders who come out ahead — it’s the ones who stay calm, stick to a plan, and don’t let emotions take the wheel. Discipline will always beat impulse when the stakes are high.
