Short Interest Moves in Facebook, Google (FB, GOOG, LNKD)
Among the social media companies based in the United States, Facebook (NASDAQ: FB), Google (NASDAQ: GOOG) and LinkedIn (NYSE: LNKD) saw significant upswings in short interest between the August 30 and September 13 settlement dates.
However, Groupon (NASDAQ: GRPN) and Zynga (NASDAQ: ZNGA) bucked the trend with declining short interest in the first two weeks of the month, while that in eBay (NASDAQ: EBAY) was essentially the same as in the previous period.
Furthermore, note that the number of U.S.-listed shares (or ADRs) sold short of Chinese social media companies Baidu (NASDAQ: BIDU) and Sina (NASDAQ: SINA) shrank in early September, while those in Renren (NYSE: RENN), Sohu.com (NASDAQ: SOHU) and YouKu Todou (NYSE: YOKU) grew.
Below we take a quick look at how Facebook, Google and LinkedIn have fared and what analysts expect from them.
Shares sold short in this social networking giant increased about 15 percent to near 27.04 million, or more than one percent of the total float. That ended three consecutive periods of declining short interest, and was the second smallest number since February.
Facebook is expected to post annual revenue growth of more than 35 percent both this year and next. The company has a market capitalization of more than $119 billion. While its long-term earnings per share (EPS) growth forecast is more than 30 percent, the price-to-earnings (P/E) ratio remains in the stratosphere.
Of 40 analysts who follow the stock and were surveyed by Thomson/First Call, 13 rate the stock at Strong Buy, and 16 others also recommend buying shares. But the share price has now overrun their mean price target. Until individual targets are raised, no further upside is indicated.
Facebook shares are trading near an all-time high after rising more than 17 percent in the past month. Over the past six months, the stock has outperformed the likes of AOL (NYSE: AOL), Google and Yahoo! (NASDAQ: YHOO), as well as the broader markets.
Short interest in this Mountain View, California-based operator of Google+ and YouTube rose more than 16 percent in the period to 4.36 million shares, or less than two percent of the float. That more than took back a decline of less than four percent in the previous period. The days to cover is more than two.
The company has a market cap near $293 billion but does not offer a dividend. It has a long-term EPS growth forecast of almost 15 percent, though its P/E ratio is greater than the industry average. Google's operating margin also is higher than the industry average, and its return on equity is almost 16 percent.
Of the 42 surveyed analysts, 32 recommend buying shares, with 12 of them rating the stock at Strong Buy. They believe the shares have some headroom, as the mean price target is about 11 percent higher than the current share price. That target would be a new multiyear high.
The share price has retreated more than two percent in the past week, but it is still more than 22 percent higher year-to-date. The stock has underperformed not only Yahoo! and Facebook over the past six months, but the Nasdaq as well. The stock's performance is in line with the S&P 500 for that period.
Short interest in this online professional network operator swelled about 14 percent to more than 3.35 million shares in the first two weeks of the month. That ended five straight periods of dwindling short interest, and it represented less than four percent of the float. Days to cover is less than two.
In early September LinkedIn raised $1.2 billion in a stock offering. The Mountain View, California-based company has a market cap of more than $27 billion. The long-term EPS growth forecast is more than 58 percent, but the P/E ratio is much higher than the industry average and the return on equity is less than five percent.
Twenty of the 35 surveyed analysts recommend buying shares, while the rest recommend holding them. However, the mean price target is only marginally higher than current share price, as well as less than the 52-week high. At least one analyst sees LinkedIn topping $300 a share.
Shares have pulled back more than four percent from a recent all-time high. The share price is more than 118 percent higher than at the beginning of the year. Over the past six months, the stock has underperformed Facebook but outperformed Google and the broader markets.
At the time of this writing, the author had no position in the mentioned equities.
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