Short Report: Bearish position on C3.ai on cusp of record high

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 3.0%, the Nasdaq Composite was up 4.2%, the Russell 2000 index was up 2.9%, the Russell 2000 Growth ETF (IWO) was up 3.3%, and the Russell 2000 Value ETF (IWN) was up 2.5% in the five-day trading session range.

SHORT INTEREST GAINERS

• Ortex-reported short interest in C3.ai (AI) was building steadily this week as the company prepares to release its Q1 earnings on Wednesday. Shorts as a percentage of float rose from 34.7% to 36.3%, matching August 10th highs and now within two points of an all time high of 38% seen in early July. Days to cover in C3.ai is also on an upswing as trading volume receded in August, rising from 1.6 to 2.0 – a three-month high. Shares of C3.ai were up 7.5% in the five-day period covered.
• Estimated short interest in Marathon Digital (MARA) had been reduced to seven-week lows of 21.7% as of last Wednesday as bears took profit following a decline of over 40% from the stock’s mid-July highs. This week however, short-selling appetite was back up to 27%, up nearly two percentage points and reaching the levels last seen in late March. Shorts are undeterred despite Marathon Digital and other bitcoin miners having been jolted higher after the U.S. Court of Appeals for the District of Columbia sided with Grayscale, which maintains its proposed bitcoin exchange-traded product is materially similar to the bitcoin futures exchange-traded products and should have been approved to trade on NYSE Arca exchange. In the five-day period covered through Thursday, Marathon Digital shares were up 19.1%.
• Ortex-reported short interest in GameStop (GME) troughed at a two-month low of 18.2% in mid-July, and since then, the short position has been tracking higher while the stock has trended lower. Shorts as a percentage of free float in GameStop rose another percentage point this week from 19.7% to 20.8%, the highest level since July 20th, while days-to-cover on the name was up 70 basis points to 19.5 – a five-month high – even as trading volumes has been relatively higher. GameStop shares had corrected about 40% from June 13th peak to August 24th low, though the stock has bounced about 13% in the five-day period covered through Thursday as broader markets staged their biggest weekly jump in seven weeks.
• Estimated short interest in Guess (GES) had receded from 30.4% to 28.8% in the two weeks prior to the company’s Q2 results on August 23rd, but following a blow-out report, bears are rebuilding their positions. Shorts as a percentage of free float was up from 29.7% to 31.3% this week, the highest level since June 9th, with days-to-cover also rising about 100 basis points to 8.4. Guess shares were up 4.3% in the five-day period covered, and have now risen over 30% since the company’s Q2 earnings beat and FY24 guidance raise. The stock is up about 18% year-to-date.

SHORT INTEREST DECLINERS

• Estimated short interest in AMC Entertainment (AMC) has shrunk from 26.6% all the way to 12.6% – the lowest level of the year – as shares collapse in the wake of its 1-for-10 reverse stock split. A telling note from analysts with Credit Suisse covering the name reflects on the company’s high $5B net debt level, more than half of which comes due in 2026, though with the stock down by 75% on a split adjusted basis in just over a month, bears are eager to lock in gains. AMC shares were down about 9% in the five-day period covered through Thursday.