Short Report: Bearish calls tracking liftoff in crypto-verse

Short interest in Coinbase, MicroStrategy expands despite the stock’ gains tracking recovery in crypto assets amid growing banking crisis

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, excluding holidays. As a basis of comparison for stocks discussed below, the S&P 500 index was up 1.1%, the Russell 2000 index was down 3.0%, the Russell 2000 Growth ETF (IWO) was down 2.4%, and the Russell 2000 Value ETF (IWN) was down 3.5% in the five-day trading session range.

SHORT INTEREST GAINERS

• The banking crisis and the implications of potentially lower interest rate peak in the Fed’s ongoing tightening cycle has been a boon to the cryptocurrency space and the stocks associated with the crypto economy. Though with shares of crypto related names rising swiftly this week, short interest in those stocks is up notably as well. Ortex reported short interest in MicroStrategy (MSTR) was jumped three percentage points at 34.8% – a six-week high – while days to cover for the stock rose 50 basis points to 6.7. Likewise, Coinbase (COIN) estimated short interest rose nearly two points to a one-month high of 21.5% and days to cover hit a peak of 2.6 – a six-week high. In the five-day period covered through Thursday, MicroStrategy shares were up 14.3% and those of Coinbase rose 16.7%.
• Estimated short interest in Beauty Health (SKIN) slid to a three-month low of about 28% late last week but has since returned to its more typical level, rising about three percentage points through Thursday to 31.1%. This week’s high of 33% matched the six-week high for the stock last seen in late February after the company’s better than expected initial FY23 guidance drove a 12% jump in shares. Beauty Health has since pared those gains and continues to trade in a sideways pattern, ending this week flat.
• Ortex-reported short interest in GroupOn (GRPN) continues to track higher as the stock price takes a more decisive turn lower. Short position as a percentage of free float was up another two points to 28.3% and days to cover on the name was up 220 bps to 8.6 – five-month high. GroupOn stock was down 14.5% in the five-day period covered through Thursday and another 16.5% on Friday, having reported a downbeat Q4, forecasting “significant cash outflows” in Q1 and withdrawing its previous call for $100M in FY23 free cash flow.

SHORT INTEREST DECLINERS

• Estimated short interest in Cricut (CRCT) had matched its 17-month high earlier this week around 25%, but has then collapsed to a one-year low of 18.5% by Thursday. The company had reported a more resilient than feared Q4 results early last week with “healthier channel inventory levels” and calls for operating margin improvement in FY23, earning price target boosts from two sell-side analysts. The stock has since held up nicely in spite of the overall pressure among both specialty retail and tech hardware sectors. In the five-day period covered through Thursday, Cricut shares were up 5.9%.
• Estimated short interest in Stoke Therapeutics (STOK) hit a five-month high early last week just shy of 27% but has since come in the wake of its Q4 results and the positive FDA announcement regarding the administration of a higher single dose of its STK-001 in the ongoing MONARCH study of children with Dravet syndrome. Short position as a percentage of free float was down to a one-month low of 20.2% from 23.9% this week, while the stock traded up about 3% in the five-day period covered.

Keywords: Short selling, short interest, days to cover, securities, lending, utilization, sentiment analysis, Coinbase, MicroStrategy, Cricut, GroupOn, Stoke Therapeutics, Beauty Health