Short Report: Bears turn focus to high-end apparel

Short interest in Guess, Revolve Group at multi-month highs as quarterly updates from both signal caution in luxury retail spending

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 1.7%, the Russell 2000 index was up 1.5%, the Russell 2000 Growth ETF (IWO) was up 1.7%, and the Russell 2000 Value ETF (IWN) was up 1.4% in the five-day trading session range.

SHORT INTEREST GAINERS

• Estimated short interest on Guess (GES) spiked to an eight-month high of 25.4% this week, up from just below 20% seen last Thursday. Short position as a percentage of free float had tracked in the high teens-low 20’s percent for the company before this week’s breakout, while the stock has mostly floundered in the wake of its last earnings disappointment in mid-March. Outside of a few standout names like Torrid (CURV) and Lululemon (LULU), both of which are up mid-teens in 2023, the Apparel Retail category has struggled in 2023 and Guess is no exception with a 17% year-to-date decline. In the five-day period covered this week however, the stock was up a modest 1.9%.
• Estimated short interest on high-end internet retailer Revolve Group (RVLV) has similarly experienced a notable jump this week, rising from 24.6% to 27.4%. This is the highest level of short interest as a percentage of free float in the name since the abrupt spike seen in mid-February. As reported last week, while the company beat on its Q1 earnings, its revenue growth turned negative relative to last year at -1%, and the management remarked that a difficult prior-year comparison and macro headwinds saw April sales fall a much steeper 7%. In the five-day period covered, Revolve was down about 5% this week, with the stock now down 46% from early February highs.
• Ortex-reported short interest in Trupanion (TRUP) has resumed its upward thrust after three weeks of pause, jumping from 28.8% to 34.7% this week to mark a three-year high. We highlighted this name in late April as a prime example of pet economy names struggling in the post-pandemic slowdown though as evidenced in its quarterly results late last week, the company has been hit particularly hard by the vet care inflation. Trupanion shares were down 38% in the five-session period through Thursday, with the stock now down about 70% from its February high.

SHORT INTEREST DECLINERS

• Estimated short interest in Voya Financial had been above the 20% mark for six months, but bears have reduced their exposure sharply in late April and again this week, when short interest as a percentage of free float fell from 19.9% to 15.6%, an 18-month low. Days to cover on the stock has also fallen over 200 basis points to 1.3 – a multi-year low. Voya Financial shares slipped over 7% after the company’s Q1 earnings miss last week, though the shorts are booking profits rather than adding to positions. In the five-day period covered, the stock was up 3.3%.
• Ortex-reported short interest in Veru slipped from 28.7% to 22.7% this week, with the bulk of the retreat coming on Tuesday, just ahead of its Q2 results on Thursday morning. The caution was hardly warranted however, as the stock slipped 17% on wider than expected loss. The stock has now erased all of the gains made since the company announced an agreement with FDA on confirmatory Phase 3 trial for sabizabulin to evaluate the treatment in hospitalized moderate to severe COVID-19 patients who are at high risk for acute respiratory distress syndrome. In the five-day period covered through Thursday, Veru shares were off by 3%.

Keywords: Short selling, short interest, days to cover, securities, lending, utilization, sentiment analysis, Guess, Revolve Group, Trupanion, Veru, Voya Financial