Short Report: Bears boost Carvana bets as Amazon muscles in on auto market

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 3.7%, the Nasdaq Composite was up 4.4%, the Russell 2000 index up 5.2%, the Russell 2000 Growth ETF (IWO) was up 5.1%, and the Russell 2000 Value ETF (IWN) was up 5.0% in the five-day trading session range through Thursday, November 16.

SHORT INTEREST GAINERS

• Estimated short interest on Carvana (CVNA) rose over three percentage points to 43.1% by Thursday after registering a one-month high of 43.8% in the prior session. The momentum in bearish appetite was accompanied by the particularly pronounced 5% decline in the stock price that day with the announcement that Amazon (AMZN) is getting into U.S. car sales with its first partnership with an automaker, Hyundai Motor. In the five-day period covered however, shares of Carvana were up 6.3%, tracking the overall lift in broader markets earlier in the week, with particularly acute upward inflection in areas of the market impacted by the run-up in interest rates over the past three months.
• Estimated short interest in Upstart (UPST) has been gaining more consistently over the past three weeks, and this week’s increase of six percentage points was especially notable as it hit a record high above 46%. Shorts were encouraged following the company’s disappointing Q3 results and below-consensus Q4 guidance – which analysts with BTIG called “mediocre” in a research note that slashed the firm’s price target on the stock by half to $32 – as shares also fell 27% following earnings. Similar to Carvana however, shares of Upstart have been swept up in the recalibration of a higher-for-longer interest rate narrative this week following the benign CPI report, rising 15% in the five-day period covered.
• Ortex-reported short interest on Beauty Health (SKIN) continues its three-month-long steady rise, jumping another three percentage points this week to end at 35.6% by Thursday, though the bears’ position as a percentage of free float registered its highest level since early January on Wednesday at 38.6%. Beauty Health shares came under heavy selling pressure earlier in the week on Monday after its disappointing earnings loss, the departure of its CEO, and a cut in FY23 guidance, while the Street followed up with no less than seven downgrades of the stock the following day. The disappointing Q3 developments also overshadowed the positive macro backdrop this week, and in the five-day period covered through Thursday, Beauty Health shares were down 52%.

SHORT INTEREST DECLINERS

• Estimated short interest in Archer Aviation (ACHR) had reached an all-time high in the prior week at 27.5% and the official exchange-reported short positioning on the name had been up over 12 consecutive half-month periods through the end of October. According to Ortex data however, broad-based short-covering ensued this week, with bearish bets being reduced from 26.8% all the way down to 21.7% – the lowest level since late September. The company reported Q3 results late last Thursday which “further solidified” its go-to-market plans, though shares of Archer Aviation were also swept up by the macro tailwinds, rising 19% in the five-day period covered through Thursday. Year-to-date, shares of the eVTOL aircraft designer have now more than tripled.