Short Report: Bear appetite for Virgin Galactic sustained despite stock bounce

Short interest in Virgin Galactic at six-month high despite stock rally on affirmation of commercial flight timeline; Bears back away from Futu Holdings as shares rebound

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 the 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 2.1%, the Russell 2000 index was down 2.1%, the Russell 1000 Growth ETF (IWF) was down 1.5%, and the Russell 1000 Value ETF (IWD) was down 2.6% in the four-day trading session range.

SHORT INTEREST GAINERS

  • Ortex-reported short interest in Virgin Galactic (SPCE) had slid to its lowest level of 2022 in the first week of December, but bearish appetite – along with volatility in the stock price – have since returned. Estimated short position on the stock was up over two percentage points this week to 24.8%, a six-month high, and has now risen six points from last month’s lows. Virgin Galactic shares have also seen an abrupt reversal. The stock saw its worst levels on record in the final week of December but has since gained over 60% from the lows and was up 5.2% in the four-day period covered by this report. The most pronounced gains in shares came last week, when Virgin Galactic spiked 12% on the company’s disclosure that the start of its commercial space flights is still on track for Q2.
  • Estimated short interest in Silvergate Capital (SI) continued to build this week, rising another three and a half percentage points to 80.5% – a new record high. Bearishness has been on the rise in spite of the sudden thaw in the “crypto winter”, as the spike in bitcoin prices to a five-month high above $23,000 level has also driven gains in stocks with cryptocurrency economy exposure. Silvergate Capital’s reversal has been far less pronounced however – the stock was down 11.6% in the four-day period covered from last Thursday’s level and only flat after taking Friday’s 13% jump into account.
  • Estimated short interest in Rite Aid (ADVICE) shares bottomed at a four-month low below 14% in the final week of December but has since tracked higher in concert with the ongoing pressure on the stock. As of Thursday, the bearish position on Rite Aid was up nearly two percentage points to 18.7%, a three-month high. Days to cover on the name was also up 50bps to 3.0. Rite Aid stock has also remained under pressure since the management cut its FY23 guidance on December 21 – shares are down 25% since that update and in the four-day period covered through Thursday, the stock was down by just over 10.%

SHORT INTEREST DECLINERS

  • Ortex-reported short interest in Stitch Fix (SFIX) has continued to decline as the stock finally seems to have found its footing. Estimated short position as a percentage of free float declined from 19.4% to a six-month low of 18.0%, while days to cover on the name was down from a 15-month high of 3.4 to 2.7. Stitch Fix shares, which had lost over 80% of their value in 2022, slipped 4.2% in the four-day period through Thursday, but ended the week higher when accounting for Friday’s 9% jump. Year-to-date, Stitch Fix stock is up 45%.
  • Estimated short interest in Futu Holdings (FUTU) had been on the rise since the start of the year when the stock fell sharply in reaction to the China Securities Regulatory Commission ordering the company to stop taking new onshore investors as customers. Much of those losses have now been pared however, and the bearish bets on the name have also been in retreat. Shorts as a percentage of free float in Futu slipped from 22.5% to 20.9%, while the stock rose 7.7% in the four-day period covered. Shares are now up 40% from the lows on January 3 in the aftermath of that CSRC request.

Keywords: Short selling, short interest, days to cover, securities, lending, utilization, sentiment analysis, Virgin Galactic, Silvergate, Rite Aid, Stitch Fix, Futu Holdings

Published first on TheFly

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