Short Sellers Retreat From Pandora, Move On eBay (EBAY, P, YELP)
Among the social media companies based in the United States, eBay (NASDAQ: EBAY), Pandora Media (NYSE: P) and Yelp (NYSE: YELP) saw significant swings in short interest between the October 15 and October 31 settlement dates.
In addition, note that the number of U.S.-listed shares (or ADRs) sold short of Chinese social media companies Renren (NYSE: RENN), Sina (NASDAQ: SINA), Sohu.com (NASDAQ: SOHU) and YouKu Todou (NYSE: YOKU) grew in late October, while those in Baidu (NASDAQ: BIDU) shrank.
Below we take a quick look at how eBay, Pandora and Yelp have fared and what analysts expect from them.
See also: Three ETFs That Will Buy Twitter
Short interest in this San Jose, California-based online commerce company increased by more than 13 percent to more than 17.04 million shares in late June. That was the greatest number of shares sold short in the past year and came to more than one percent of the float. Days to cover dropped to about one.
eBay has a market capitalization of more than $68 billion. It is expected to post double-digit revenue growth in the current quarter and the next. The long-term earnings per share (EPS) growth forecast is almost 15 percent, but the price-to-earnings (P/E) ratio is about 25. The return on equity is less than 13 percent.
Of the 39 analysts who follow the stock that were surveyed by Thomson/First Call, 33 recommend buying shares, 13 of them rating the stock at Strong Buy. The mean price target, or where analysts expect the share price to go, is more than 14 percent higher than the current share price.
The share price has pulled back less than three percent in the past month and it is up only marginally from the beginning of the year. Over the past six months, the stock has underperformed competitor Amazon.com (NASDAQ: AMZN) but outperformed Overstock.com (NASDAQ: OSTK).
Short interest in this Internet radio service provider shrank by more than 16 percent to around 23.50 million shares during the period, or more than 13 percent of the float. That was on top of an 11 percent decline in short interest in the previous period. The days to cover remained less than three.
Pandora launched an Android tablet app in the period. The Oakland, California-based company has a market cap of less than $5 billion. While the long-term EPS growth forecast is about 45 percent, note that the return on equity and operating margins are in negative territory.
Of the 28 analysts surveyed, 16 recommend buying Pandora shares, five of them rating the stock at Strong Buy. Yet the analysts see no room for shares to run, as the mean price target is less than the current share price. The street-high price target indicates more than 22 percent potential upside, though.
Pandora's share price is about nine percent higher in the past month and up about 186 percent year-to-date. Over the past six months, the stock has outperformed competitor Sirius XM Radio (NASDAQ: SIRI), as well as the broader markets.
After a marginal decline in the previous period, this San Francisco-based company saw its short interest decrease more than seven percent in the latter weeks of October to about 6.79 million shares. That represented about 13 percent of the total float. The days to cover slipped to less than two.
Yelp posted a bigger-than-expected net loss during the period. The company has a market cap of more than $4 billion. While Yelp has a long-term EPS growth forecast of about 15 percent, its return on equity is in the red. Note that analysts do not expect the company to show a profit until 2014.
Half of the 26 polled analysts recommend buying shares, while the other half recommend holding them. Their mean price target is less than the current share price, meaning they see no upside potential at this time. Note that the street-high target is about 16 percent higher than the share price.
The share price has retreated more than six percent in the past month but is still about 103 percent higher than six months ago. The stock has outperformed Yahoo! (NASDAQ: YHOO) and the broader markets over the past six months.
At the time of this writing, the author had no position in the mentioned equities.
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