Short Report: Bearish views on Lovesac remain elevated despite earnings beat

Short interest buildup in Lovesac sustains momentum; Nordstrom bearishness recedes as post-earnings correction slows

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 2.6%, the Russell 2000 index was up 2.8%, the Russell 2000 Growth ETF (IWO) was up 2.8%, and the Russell 2000 Value ETF (IWN) was up 2.9% in the five-day trading session range.

SHORT INTEREST GAINERS

• Ortex-reported short interest in Lovesac (LOVE) has been building for three consecutive weeks, and the company’s better than expected Q4 results earlier this week were hardly a deterrent. Notably, while the company’s earnings guidance for FY24 was below consensus at the midpoint, a note from Roth MKM saw it as “better than feared”. Estimated short interest as a percentage of free float on Lovesac rose from 29.4% to 32.0% in the five-day period covered, even as the stock jumped 15%, returning to the $27-$30 month-long range last seen in February.
• Estimated short interest short interest in DigitalOcean (DOCN) troughed in mid-February around 14% when the company announced better than expected Q4 results and guidance but has since been on the rise for six consecutive weeks. In the period covered through Thursday, estimated shorts as a percentage of free float were up over five points to 25.4% – a record high. Bears are also unfazed by the stock’s 2023 rebound – shares of DigitalOcean are up 3.7% in the five-day period covered, up about 45% year-to-date, and up another 6.5% early on Friday to reach a 5-month high.
• Estimated short interest in Mobileye (MBLY) is up over three percentage points this week to reach 22.1% – a seven-month high. Days to cover on the stock also reached as high as 14.5 earlier this week, the highest level on record. Shares are down 3.2% in the five-day period covered but up 4.2% in early trading on Friday, gaining upward momentum from high-volume session on Wednesday.
• After holding flat last week, the estimated short interest in GroupOn (GRPN) continued to build this week, rising from 28.5% to 31.9%, a three-month high. Days to cover held around 9.0 – roughly a four-month high. Short positions appear to be tracking the price action. with shares in GroupOn falling 9.4% through Thursday, though the stock is up an outsized 24% on Friday, with the company’s announcement of Dusan Senkypl – the co-founder of Pale Fire Capital – becoming a new CEO.
• Estimated short interest in Fisker (FSR) is within a point of its record high again, rising four percentage points this week to 40.4% while matching the levels of bearish activity just after the company’s Q4 earnings update last month that prompted a 30% rally in shares. The build-up in short positioning is hardly a reaction to the outsized stock price jump this time however – the stock was up a much more modest 4.4% this week and remains down about 24% from the high that followed February’s earnings-driven spike.

SHORT INTEREST DECLINERS

• Estimated short interest in Nordstrom (JWN) had reached a three-month high around 27% two weeks ago, but has since declined for two consecutive weeks. The short position as a percentage of free float was down from 24.7% last Thursday to 18.4% this week, the lowest level since June of last year. Reduced bearishness is also tracking the downturn in the stock price from its post-earnings spike in early February. The stock is down over 40% from February 3rd high, but up a modest 1.3% in the five-day period covered this week
• Ortex-reported short interest in Reata Pharmaceuticals (RETA) fell sharply from 31.6% as of last Thursday to 19.5% this week, where it held steady for the duration of the period. The stock tripled at the start of the month with the announcement of FDA approval of SKYCLARYS for the treatment of Friedreich’s ataxia and has largely held its gains, trading within the $80-$93 range. Reata Pharmaceuticals shares are up 2.3% in the five-day period traded through Thursday.

Keywords: Short selling, short interest, days to cover, securities, lending, utilization, sentiment analysis, Digital Ocean, Mobileye, GroupOn, Fisker, Lovesac, Nordstrom, Reata Pharmaceuticals