Market Overview

Short Interest Swings in eBay, Facebook & Google

Among the social media players, eBay (NASDAQ: EBAY), Facebook (NASDAQ: FB) and Google (NASDAQ: GOOG) saw big swings in short interest between the March 28 and April 15 settlement dates.

Other social media companies based in the United States that also saw the number of shares sold short rise in the period include Groupon (NASDAQ: GRPN), LinkedIn (NYSE: LNKD), United Online (NASDAQ: UNTD) and Yelp (NYSE: YELP).

But short sellers shied away from Angie's List (NASDAQ: ANGI), Pandora (NYSE: P), Shutterfly (NASDAQ: SFLY) and Zynga (NASDAQ: ZNGA) in the first two weeks of April.

Also, note that U.S.-listed shares (or ADRs) sold short of Chinese social media companies Renren (NYSE: RENN) and YouKu Todou (NYSE: YOKU) rose by double-digit percentages to the middle of April. But short interest in Baidu (NASDAQ: BIDU), Sina (NASDAQ: SINA) and Sohu.com (NASDAQ: SOHU) fell.

eBay

Short interest in this San Jose, California-based online commerce company increased by about 23 percent to 15.34 million shares in early April. That was on top of a more than 25 percent rise in the previous period. But the number of shares sold short was a little more than one percent of the float, and days to cover was less than two.

In early April, eBay shared its long-term growth plans and it lowered its seller fees, and its PayPal unit made an acquisition. The company has a market capitalization of more than $68 billion. The long-term earnings per share (EPS) growth forecast is more than 15 percent, but the price-to-earnings (P/E) ratio is about 25. The return on equity is less than 14 percent.

Of the 39 analysts who follow the stock that were surveyed by Thomson/First Call, 30 recommend buying shares, 11 of them rating the stock at Strong Buy. The mean price target, or where analysts expect the share price to go, is more than percent higher than the current share price. That target would be a new multiyear high.

The share price pulled back about eight percent last week following a revenue miss and disappointing guidance in the first-quarter report. Shares are now down marginally year-to-date. Over the past six months, the stock has underperformed Amazon.com (NASDAQ: AMZN) and the S&P 500.

Facebook

Shares sold short in this social networking giant retreated more than nine percent to about 35.33 million, taking back some of a 12 percent gain in the previous period. But that was the still the second highest level of short interest so far this year, though it was far less than the peak of more than 95 million shares sold short last November.

Facebook rolled out its Facebook Home app in early April, which generated a considerable amount of buzz. The company has a market cap of more than $62 billion. While its long-term EPS growth forecast is about 29 percent, the return on equity is less than one percent and the P/E ratio is in the stratosphere.

Nine out of 37 surveyed analysts rate the stock at Strong Buy, and 12 others also recommend buying shares. Their mean price target indicates upside potential of about 21 percent, relative to the current share price. But that target is less than the post-IPO high set back in May.

Facebook shares have traded mostly between $25 and $30 since the beginning of December. The stock is down more than six percent since the beginning of the year. Over the past six months, the stock has narrowly underperformed Google, but it has outperformed the broader markets.

Google

Short interest in this Mountain View, California-based Internet Goliath decreased for the third period in a row, falling more than 24 percent in the first two weeks of April to 3.56 million shares. That is the second lowest number of shares sold short so far this year, and less than two percent of the float.

The company has a market cap of more than $268 billion but does not offer a dividend. It has a long-term EPS growth forecast of more than 15 percent, but its P/E ratio is around 24. Google's operating margin is lower than the industry average, and its return on equity is more than 16 percent.

Of the 41 surveyed analysts, 28 recommend buying shares, 11 of them rating the stock at Strong Buy. The mean price target, or where analysts expect the share price to go, is more than eight percent higher than the current share price. That target would be a new multiyear high.

The share price is about three percent lower than the current multiyear high set back in March. The stock has underperformed Yahoo! (NASDAQ: YHOO) but outperformed the broader markets over the past six months.

Posted-In: Amazon.com Angie's List EBAY Facebook Google GrouponShort Ideas Trading Ideas Best of Benzinga

 

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