LinkedIn, Twitter On New Year Short Interest Surge (LNKD, TWTR, YELP)
The number of shares sold short in Angie's List, Facebook, Shutterfly and Zynga also increased somewhat between the December 31 and January 15 settlement dates.
Short interest in Pandora Media was little changed from the previous settlement date. Short sellers shied away from eBay, Google, Groupon and United Online during the period.
In addition, note that the number of U.S.-listed shares (or ADRs) sold short of Chinese social media companies Renren and YouKu Todou shrank in early January, while those in Baidu, Sina and Sohu.com increased.
Below we take a quick look at how LinkedIn, Twitter and Yelp have fared and what analysts expect from them.
Short interest in this online professional network operator grew more than 33 percent to almost 3.80 million shares in the first two weeks of the year. That more than erased a 24 percent decline in the previous period. The number of shares sold short was almost four percent of the float.
LinkedIn hired its first president of China operations in mid-January. The Mountain View, California-based company has a market capitalization of more than $25 billion. The long-term earnings per share (EPS) growth forecast is about 54 percent, but the price-to-earnings (P/E) ratio is much higher than the industry average and the return on equity is less than three percent.
Of the 36 analysts who follow the stock surveyed by Thomson/First Call, 21 recommend buying shares, while the rest recommend holding them. The mean price target is more than 20 percent higher than current share price and would be a new 52-week high. At least one analyst sees LinkedIn reaching $300 a share.
Shares dropped more than five percent in the past week in the market sell-off, dropping below the 50-day moving average. The share price is more than 61 percent higher than a year ago. Over the past six months, though, the stock has underperformed Facebook, Google and the S&P 500.
Short interest in this microblogging service provider has grown in every period since its highly anticipated initial public offering last November. The 32.69 million shares short in mid-January represents about 15 percent of the float. But the days to cover is a little more than one.
Analysts so far expect Twitter to book more than $1 billion in revenue for 2014, but to have a net loss nonetheless. The San Francisco-based company has a market cap of less than $33 billion. The return on equity is more than 115 percent, but note that the operating margin is in the red.
The consensus recommendation of the 29 analysts surveyed is to hold Twitter shares. The analysts see no room for shares to run, as the mean price target is still much less than the current share price, even after the latter has dropped more than 14 percent year-to-date.
Twitter's share price has pulled back about 21 percent since the post-IPO high just after Christmas. Still, the stock has outperformed not only the likes of Facebook, Google and LinkedIn since coming public, but the Nasdaq and the S&P 500 as well.
See also: Five Star Stock Watch: Twitter
This San Francisco-based company saw its short interest swell more than 17 percent in the first weeks of January to about 7.27 million shares, or about 13 percent of the total float. The days to cover fell to about two. The number of shares sold short peaked at more than 8.3 million back in November.
Shares got a boost from J.P. Morgan analysts during the period and reached a new multiyear high. The company now has a market cap near $5 billion. While Yelp has a long-term EPS growth forecast of about 40 percent, its return on equity and operating margin are in the red.
Of the 30 polled analysts, 16 recommend buying shares, while the rest recommend holding them. The share price has overrun their mean price target, meaning they see no upside potential at this time. Note that the street-high target is more than 24 percent higher than the share price.
The share price has pulled back more than eight percent in the past week. It is still up about 72 percent from six months ago and still above the 50-day moving average. The stock has outperformed Yahoo! 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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