Short interest in Marathon Digital higher with bears skeptical of bottom despite fraying crypto correlation with growth stocks 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 3.1%, the Russell 2000 index was down 2.8%, the Russell 1000 Growth ETF (IWF) was down 2.7%, and the Russell 1000 Value ETF (IWD) was down 2.8% in the period range.
SHORT INTEREST GAINERS
- The close correlation between steep declines in broader equity indices and the crypto space has been breaking down with bitcoin prices stabilizing above $18,000 despite the continued lows being made in growth stocks. Marathon Digital (MARA) – one of the more highly shorted names in the sector – has also rebounded over the past week, rising 15% from last Friday’s lows and 2.4% overall in the five-day period covered. The stock is up another 2% heading toward close today despite more losses on Wall Street, though Ortex-estimated short interest suggests that bears are skeptical of assigning a bottom in the space, rising from 22.1% to 26.5% - a six-week high.
- Estimated short interest in Rite Aid (RAD) rose from 16.6% to 18.8% on Thursday heading into its Q2 results, and the increase in bearish appetite proved to be prescient as the stock fell by over 30% on earnings miss and a cut in FY23 guidance. An analyst with Evercore has since walked back her “TAP Outperform list” designation as Rite Aid did not experience the sort of improvement in its core business that she expected, while the company has attributed the disappointing performance to a reduction in revenue from COVID vaccines and testing as well as store closures. In the five-day period covered, the stock was down 28.5%.
- We featured Asana (ASAN) two weeks ago as one of the names where bearish interest had returned following a shorts-busting event in the prior week – September 7 – when the company beat Q3 expectations and received a $350M injection from its CEO Dustin Moskovitz. After a quiet week in terms of bearish activity last week, the incremental increase in the Ortex-reported short interest this week has resurfaced, rising from about 20% to about 24% - the highest level since June. Asana has traded well off the post-earnings high over the past three weeks, but the stock is rising 1.4% in the five-day period covered and was last seen higher by as much as 3% in afternoon trade on Friday.
- Virgin Galactic’s (SPCE) disappointing earnings in early August negated any signs of upward momentum reached over the prior two months as shares fell about 20% the following day and have kept moving lower. The downward trajectory in the stock price coincided with the gradual reduction in short interest, but that pattern ended about two weeks ago. Ortex-reported short interest in Virgin Galactic bottomed just above 19% on September 14th and has since risen to about 24% - a six-week high - with the bulk of the increase seen this week. In the five-day period covered, shares were down 2%.
- The recently listed gaming content creation platform FaZe Holdings (FAZE) was featured in last month’s edition of this screen and has once again popped up on our radar as estimated short interest in the name stepped up by another steep increment, rising from 93% to fresh record high 114%. Investors are re-evaluating the company’s prospects as the stock has also continued to slide, breaching its opening levels just shy of $10. FaZe Holdings was down 31.5% in the five-day period covered as of Thursday-close.
SHORT INTEREST DECLINERS
- The spike in bearish appetite for Bluebird bio (BLUE) highlighted last week had receded, with estimated short interest on the name retreating from last Wednesday’s record-high peak of 36% to 32.7%, just as the stock found some support above $5 per share. Days to cover on the name was also down sharply from 2.3 to 1.5. Despite reduced bearish positioning reported, Bluebird bio shares ended the five-day period covered down by 4.5%.
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MARA RAD ASAN SPCE FAZE BLUE Keywords: Short selling, AMC, GameStop, Rite Aid, Asana, Virgin Galactic, Faze Holding, Marathon Digital, Bluebird bio, short interest, days to cover, securities, lending, utilization, sentiment analysis