Short Report: Bears boost WW exposure ahead of earnings after marketing debacle

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 1.2%, the Nasdaq Composite was up 0.9%, the Russell 2000 index was down 2.3%, the Russell 2000 Growth ETF (IWO) was down 2.3%, and the Russell 2000 Value ETF (IWN) was down 2.3% in the four-day trading session range through Thursday, February 22.

SHORT INTEREST GAINERS

• Ortex-reported short interest on WW International (WW), or WeightWatchers, troughed last week at a three month low of 17.8%, though bearish appetite on the name is now on the rise heading into this week’s earnings, increasing to 19.7%. The bearish build is particularly notable as the stock had fallen sharply to a new 52-week low this week, losing 29% in the four-day period through Thursday. The steep decline was the result of damaging allegations reported this week that the company sought to recruit social media personalities to promote the “WeightWatchers GLP-1 Program” – a service intended to support people taking the weight loss drugs without ensuring they actually took the drug. Turnaround fortunes for WW were exacerbated by a research note from Craig-Hallum, whose checks suggest that the demand for the company’s legacy offering during the post-New Year’s “Diet Season” was weak.
• Ortex-reported short interest in Moonlake Immunotherapeutics (MLTX) shot higher early this week, returning from the holiday weekend up forty percentage points at 73.7% – the highest level in eight months. Trading volume in the name has also picked up since last Thursday with a decidedly bearish bias – in the four-day period covered, shares were down 13% this week.
• Estimated short interest in PureCycle Technologies (PCT) is up sharply this week, rising from 42.8% to 55.6% – the highest level for the stock since mid-December when shares plunged over 40% following the announcement of a shutdown at its flagship Ironton purification facility. PureCycle had recovered all of those losses, though bears are renewing their bets ahead of the company’s Q4 update this week. Shares of the stock were down 10% in the four-day period covered.
• Ortex-reported short interest in Lemonade (LMND) tracked sideways in a narrow 25%-27% band since late February but spiked this week from 25% to a 19-month high of 30.4% just as the company prepares to report its Q4 results this week. The stock is also up 19% from its multi-month lows just about three weeks ago as bears are betting that the steep gain it made after Lemonade reported a smaller than expected loss and raised its guidance last quarter will not be repeated.
• Estimated short interest in Scholar Rock (SRRK) slipped to a two month low just above 20% late last month, though shorts as a percentage of free float have since risen for three consecutive weeks. This week, the bearish position was up over three percentage points, rising from 24.1% to 27.5% – the highest level on record. Shares of the biotech name were down about 1% in the four-day period through Thursday.

SHORT INTEREST DECLINERS

• Ortex-reported short interest in The Children’s Place (PLCE) shot up to a seven-month high of about 28% late last week as bears expressed their skepticism in the Mithaq Capital’s majority stake disclosed by the company last Thursday. The extreme short positioning reversed this week however, receding from 27.8% to 23.7% with bears taking profits as the stock’s sharp gains reversed – in the four-day period through Thursday, Children’s Place shares were down just over 25%.