Short Report: Surprise GameStop profit spooks bears

Short interest in GameStop retreats from 7-month high after surprise earnings upside; Bearish calls in Crypto space recedes despite pause in bitcoin rally

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 down 0.3%, the Russell 2000 index was down 2.9%, the Russell 2000 Growth ETF (IWO) was down 2.0%, and the Russell 2000 Value ETF (IWN) was down 3.4% in the five-day trading session range.

SHORT INTEREST GAINERS

• Ortex-reported short interest in GameStop (GME) has been on a steady uphill climb for about a month, rising from 19.5% as of February 24th to this week’s high of 24.7% – the highest level since early August. The company reported a much better than expected set of results this week however with surprise net profit against expected loss, spiking shares and spooking bears. Estimated short position as a percentage of free float slipped to 23.7% by end of Thursday for a more marginal 0.6 percentage point gain in the five-day period covered, and the stock closed the five-day period up about 35%.
• Store closures and cost cuts at Rite Aid (RAD) have hardly offset the steep decline in traffic that the company experienced from waning COVID vaccine demand last year, cratering shares by nearly 80% in 2022. 2023 still finds the stock in the quicksand. The pressure on Rite Aid has become even more pronounced over the past two weeks in the wake of the announcement by the U.S. Justice Department last Monday that it is suing the company for ignoring the “obvious red flags” in the opioid addiction epidemic. The stock was down 21% in the five-day period covered through Thursday and has fallen 36% for the past two weeks overall since being targeted by the DOJ. Meanwhile, the short position on Rite Aid has increased from 27.2% to 33.5% this week – a 10-month high.
• Shares of Fate Therapeutics (FATE) have been in the doldrums ever since the January announcement of discontinued collaboration with Janssen in exchange for cash runway extension to 2025. While the market awaits progress on its clinical updates however, the short position on the stock continues to build, rising to a record-high 29% this week before ending Thursday with a four percentage point overall increase at 26.8%. In the five-day period covered, the stock was down about 6%.

SHORT INTEREST DECLINERS

• The rebound in bitcoin prices may have slowed this week following last week’s scorching performance, but the bears are re-evaluating their positioning. After a thrust higher to six-week highs in the prior period, estimated short interest in MicroStrategy (MSTR) slipped from 34.8% to a 10-month low of 30.3%, while that of Coinbase (COIN) retreated by nearly a point to 20.7%. The latter was hampered by a Wells Notice from the SEC warning that regulators plan to bring enforcement action for potential violations of securities laws, likely keeping some short-sellers in the mix. Shorts in Marathon Digital (MARA) saw the biggest retreat among the publicly traded names in the crypto economy, falling from 34.7% to 23.2% – a six-month low. In the five-day period covered, MicroStrategy shares were up 9.2%, Coinbase was up 2.1%, and Marathon Digital traded up 10.9%.
• As of last Thursday, Ortex-reported short interest in Blink Charging (BLNK) had risen over five percentage points in a span of a month to about 26%. Estimated short positioning was reduced this week to about 24% however, with the selloff in the stock also finally showing some signs of abating. In the five-day period covered, Blink Charging shares were down 1.7%.

Keywords: Short selling, short interest, days to cover, securities, lending, utilization, sentiment analysis, Coinbase, MicroStrategy, GameStop, Rite Aid, Fate Therapeutics, Marathon Digital, Blink Charging