Short interest in Wayfair climbs to 18-month high despite the spike in stock; Bears finally relent on Silvergate Capital
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 up 4.2%, the Russell 2000 index was up 3.6%, the Russell 1000 Growth ETF (IWF) was up 5.2%, and the Russell 1000 Value ETF (IWD) was up 3.2% in the five-day trading session range.
SHORT INTEREST GAINERS
- Ortex-reported short interest in Wayfair (W) has continued its month-long climb, rising nearly five percentage points this week to 37.6% - the highest level since June of 2020. Wayfair shares lost about 80% of their value in 2022, returning to pre-pandemic lows. The stock is up over 50% year-to-date however, with gains of 44% in the five-day period covered through Thursday and another 13.4% advance on Friday. Wayfair’s update on its cost efficiency plan indicating that it is ” well underway to accelerate the company’s timeline for adjusted EBITDA breakeven” last Friday has fuelled the rally in the stock, with multiple Wall Street analysts upgrading the name and raising price targets this week.
- Estimated short interest in Earthstone Energy (ESTE) is up for the second consecutive week with a much more pronounced increase, rising seven percentage points to 30.7% - the highest level since early October of 2022. Days to cover on the stock is up 60 basis points to 6.9 – the highest level since August. News flow has been sparse on the name, and the company is yet to report its Q4 results, though the stock has tracked better than some of its larger E&P peers this week, including Hess Corp (HES), which exceeded estimates and rallied on earnings. In the five-day period covered, Earthstone Energy is up 6.3%.
- Ortex-reported short interest on Cassava Sciences (SAVA) jumped abruptly on much higher volume this week, rising over six percentage points to 28.2%. This marks the highest level in short interest as percentage of free float since October 10th. Bears are looking for more downside momentum after the stock traded sharply lower this week with a spike in volume following disappointing phase 2 study data on simufilam for Alzheimer's disease treatment – in fact, STAT’s Feuerstein’s verdict on the data stated the “results tell you that simulfilam is no better than a placebo in Alzheimer's disease”. In the five-day period covered, Cassava Sciences was down 15.5%.
- Hopes for a turnaround at Bed Bath and Beyond (BBBY) were dashed this week after the company’s 10-q filing revealed that “events of default” in its credit facilities had been triggered on January 13th by its failure to prepay an overadvance and satisfy a financial covenant. The stock had tripled earlier this month following its earnings report and management commentary that a turnaround plan is being implemented “expeditiously”, though those gains are now mostly gone - shares were down 33.5% in the five day period traded and the estimated short interest on the stock rose eight and a half percentage points to 47.3% - a five-month high.
- Estimated short interest in Marathon Digital (MARA) saw another step-up increase this week, rising from 39.8% to 45.7% - the highest level since early 2019. Prior to the jump, bearish expression gauged by Ortex has been in a narrow range of over 38% but below 40% for over a month. The increase also comes as volatility in the cryptocurrency markets has subsided this week and bitcoin gains from the $16,000’s to $23,000’s have been preserved. Marathon Digital was up 19.2% in the five-day period traded, though shares fell over 8% on Friday upon release of exchange data highlighting the short interest increase and following the announcement by the company in an 8-K filing that it was partnering to build a large-scale crypto mining facility in Abu Dhabi.
SHORT INTEREST DECLINERS
- After three months of steady increase, the estimated short interest in Silvergate Capital (SI) finally appears to be retrenching. Ortex reported short position on the stock as a percentage of free float had spiked from 13% to 83% from late November through this Monday, but that level had since retreated to 72% by Thursday close – the lowest level since January 9th. Silvergate shares were also up 16% in the five-day period, though the stock surrendered some of that advance with a 3.8% Friday loss in response to the announcement that the company is suspending a Series A Preferred Stock Dividend.
Symbols: W ESTE SAVA BBBY MARA SI
Keywords: Short selling, short interest, days to cover, securities, lending, utilization, sentiment analysis, Silvergate Capital, Earthstone Energy, Cassava Sciences, Bed Bath and Beyond, Marathon Digital, Wayfair