Short Sellers Load Up On Pandora and Zynga (GRPN, P, ZNGA)
The number of shares short in Yelp and United Online rose by double-digit percentages between the April 15 and April 30 settlement dates, while short interest grew more moderately in Angie's List, Facebook, LinkedIn and Twitter.
Short sellers also shied away from eBay, Google and Shutterfly during the period.
In addition, note that the number of U.S.-listed shares (or ADSs) sold short of Chinese social media companies Baidu, Renren, Sina and Sohu.com declined in the final weeks of the month, while short interest in YouKu Todou and YY increased.
Below we take a quick look at how Groupon, Pandora and Zynga have fared and what analysts expect from them.
This online local commerce marketplace saw short interest shrink more than 21 percent during the period to more than 54.33 million shares. That was the lowest it has been since February. The number of shares sold short was about 12 percent of the float, and the days to cover rose to more than four.
Analysts predict that Groupon earnings will be flat in the current and next quarters, as well as for the full year. The company now has a market capitalization near $4 billion. While Groupon has a long-term earnings per share (EPS) growth forecast of more than 26 percent, its return on equity is in the red.
The consensus recommendation of the analysts surveyed by Thomson/First Call has been to hold shares for at least the past three months. However, the analysts' mean price target suggests there is potential upside of more than 34 percent. That consensus target is less than the 52-week high, though.
Note that the share price has dropped more than 14 percent in the past month, and it hit a 52-week low last week. It is well below the 200-day moving average. The stock has not only underperformed the likes of eBay and Facebook over the past six months, but the broader markets as well.
Short interest in this Oakland, California-based Internet radio provider increased more than 17 percent in the final weeks of the month to more than 15.50 million shares. That was a little more than eight percent of the total float, and the greatest number of shares short since February.
The company posted a wider net loss but better-than-expected revenue during the period. It has a market cap of more than $4 billion and a long-term EPS growth forecast of more than 40 percent. However, both the return on equity and the operating margin are in negative territory.
Of the 31 surveyed analysts, 20 recommend buying shares, with seven of them rating the stock at Strong Buy. They believe the shares have plenty of headroom, as the mean price target is more than 35 percent higher than the current share price. But that target is less than the 52-week high from early March.
The share price has retreated more than 15 percent in the past month, and the 50-day and 200-day moving averages are poised to form a death cross. The stock has underperformed the Nasdaq and the S&P 500 over the past six months. It has narrowly underformed Sirius XM as well.
Short interest in the online social games operator jumped more than 34 percent to around 64.72 million shares during the period, or about 10 percent of the float. That was the greatest number of shares short in the past year. It would take less than two days to close out all of the short positions.
Zynga's first-quarter net loss narrowed, and revenues exceeded consensus estimates. The San Francisco-based company has a market cap of about $3 billion. Its long-term EPS growth forecast is about 30 percent, but here too the return on equity and operating margin are still in the red.
For at least three months, the analysts' consensus recommendation has been to hold shares of Zynga. The stock has more Underperform ratings than buy recommendations. A move to the mean price target would be a gain of more than 25 percent for the shares. The consensus target is less than the 52-week high, though.
The share price is more than 14 percent lower than a month ago and down about 12 percent year to date. It also is below the 200-day moving average. Over the past six months, the stock has underperformed not only the likes of Electronic Arts and Facebook, but the broader markets as well.
At the time of this writing, the author had no position in the mentioned equities.
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