Bets against Virgin Galactic rise as shares crash on convertible debt offering; GitLab shorts build as 2021 IPOs suffer
Welcome to this week’s installment of “The Short Interest Report" - The Fly's weekly recap of short interest trends among some of the most widely followed high-short-float stocks. Using the data from our partner Ortex.com, which utilizes the latest information from stock lenders to estimate short interest changes for thousands of publicly traded companies, this report will screen for some of biggest changes in short interest as a percentage of free float and days-to-cover ratios while also considering the short interest data on some of the more volatile and heavier-traded names of the week. Based on the availability of data from Ortex, the report tracks the trading period that covers prior Friday through Thursday of this week. As a basis of comparison for stocks discussed below, the S&P 500 index was down 0.8%, the Russell 2000 index down 2.1%, the Russell 1000 Growth ETF (IWF) was down 2.4%, and the Russell 1000 Value ETF (IWD) was up 0.6% in the period range.
SHORT INTEREST GAINERS
Short position in Virgin Galactic (SPCE) has lifted off on strong overall volume while the stock headed for turbulence. The company’s announced convertible debt offering on Thursday facilitated the spike in bearish sentiment, with the overall shorts as a percentage of free float doubling to 28% and days-to-cover ratio jumped by nearly 80% to 2.7. The stock had been trading sideways for much of the week, but yesterday’s plunge brought the overall five-day return to down about 15%.
As repositioning from Growth to Value shifts into higher gear, the recent high-profile IPOs are neck-in-neck with software/tech in terms of aggressive selling, and GitLab (GTLB) has the dubious distinction of fitting into both categories. The estimated short position in the stock is up for the second consecutive week, rising another five percentage points to 41% - just shy of its public-trading high seen on December 24th. An analyst with Piper Sandler upgraded the stock late last week on expectations of sustained IT spending tailwind, though the shares are down another 6.3% in the five-day period covered.
Financial Times profiled Beyond Meat (BYND) just this week, saying the company has become one of the most shorted names since its material guidance cut in October, and the Ortex-derived real time data certainly reflects that sentiment. Short positions as a percentage of free float hit their all-time high around 40% in late November, and while the bearishness had subsided over the next five weeks, the estimated short position recorded a build of seven percentage points to 35.7% over the past week. The more sanguine investors are hopeful that the launch of the McPlant at McDonalds and the “Beyond Meat” fried chicken announced at KFC just this week will put a floor under this beaten down name, and despite the return of bearish focus, shares were up 5.6% in the five-day period covered.
An earnings miss and a guidance cut in Bed Bath and Beyond (BBBY) late last week renewed some of the more pronounced bearish sentiment seen in the company in late October, with estimated short position increasing seven percentage points to 30.6% - the highest level in seven weeks. Sell-side research we cover, as well as the markets, are split on predicting the company’s fate however, with more optimistic voices willing to give the orchestrated turnaround at Bed Bath a bit more time amid receding supply chain woes, while the less upbeat analysts harp on its loss of market share and “consumer relevance”. Shares of in Bed Bath and Beyond were up 4.6% in the five-day period covered.
Estimated short interest in Stitch Fix (SFIX) has been on an upward trajectory since the start of the year, rising five percentage points this week to 25.6%, the highest level since December 20th, while its days-to-cover ratio was up 30% to 1.8. After two consecutive weeks of gains, the short position is now within four percentage points of the high for most of 2021. In the five-day period covered, Stitch Fix shares were down another 12.9%.
SHORT INTEREST DECLINERS
DoubleVerify (DV) is among the biggest decliners in terms estimated short position in spite of the continued pressure on the stock. Following a spike of about 50 percentage points in early December, bearish bets fell from 26% to just 3% in the past five-day period, even though the stock was down 7.5% in the time frame.
We had profiled Codex DNA (DNAY) as one of the stocks with a particularly steep increase in bearish bets, though the company’s licensing agreement with Pfizer announced this week has helped to unwind some of those shorts. The estimated short position in Codex DNA was down over 50 percentage points to 23%, even though the stock pared the post-announcement gains to fall 12% in the five-day period covered.
Keywords: Short selling, short interest, days to cover, securities, lending, utilization, GameStop, AMC, Virgin Galactic, Stitch Fix, Beyond Meat, GitLab sentiment analysis