3 Social Media Stocks That Short Sellers Like Right Now
Among the leading social media companies based in the United States, Groupon (NASDAQ: GRPN), LinkedIn (NYSE: LNKD) and Pandora Media (NYSE: P) saw significant upswings in short interest in early June.
The number of shares short in Angie's List, Facebook, Twitter and United Online grew somewhat between the May 30 and June 13 settlement dates. But short sellers shied away from eBay, Google, Shutterfly, Yelp and Zynga during the period.
In addition, note that the number of U.S.-listed shares (or ADSs) sold short of Chinese social media companies Baidu, Sina, and YY increased in the first weeks of the month, but short interest in Renren, Sohu.com and YouKu Todou declined.
Below is a quick look at how Groupon, LinkedIn and Pandora have fared and what analysts expect from them.
This online local commerce marketplace saw short interest grow more than 15 percent during the period to more than 75.97 million shares, which was the highest it has been in the past year. The number of shares sold short was more than 16 percent of the float, and the days to cover was more more than four.
In June, Groupon shares got a boost from news that Priceline would acquire OpenTable. Groupon has a market capitalization of less than $5 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 29 percent. However, that consensus target is less than the 52-week high.
The share price climbed more than six percent during the two-week period, but as of the close on Wednesday, it was down around 43 percent since the beginning of the year. The stock has underperformed eBay, Facebook and the broader markets over the past six months.
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Short interest in this online professional network operator swelled about 12 percent to almost 4.32 million shares in the first two weeks of the month. That was the greatest number of shares short since February, and it represented more than four percent of the float. Days to cover was more than two.
The diversity of this Mountain View, California-based company's workforce came under scrutiny in the period. LinkedIn has a market cap of more than $20 billion. The long-term EPS growth forecast is about 34 percent, but the return on equity is in negative territory.
Of the 37 surveyed analysts, 26 recommend buying shares and the rest recommend holding them. The mean price target, or where analysts expect the share price to go, is around 24 percent higher than current share price. Note that consensus target is less than the 52-week high.
Shares were less than six percent higher at the end of the two-week period, but they are still down nearly 20 year-to-date. The share price is well below the 200-day moving average. Over the past six months, the stock has underperformed Facebook, Google and the broader markets.
Short interest in this Internet radio service provider rose about 17 percent. The 17.45 million shares short at mid-month represent more than nine percent of the float, and it was the highest number of shares short since January. It would take more than two days to cover all short positions.
Amazon became a competitor when it announced its own streaming music service earlier this month. Oakland, California-based Pandora has a market cap of nearly $6 billion. Its long-term EPS growth forecast is almost 41 percent, but its operating margin and return on equity are in the red.
Of the 31 analysts polled, seven rate the stock at Strong Buy and 15 more also recommend buying shares. A move to the analysts' mean price target would be a gain of more than 15 percent for the shares. However, shares have traded higher than that consensus target as recently as March.
Short sellers watched Pandora's share price rise more than 10 percent in the first weeks of the month and it has climbed more than six percent since then. Over the past six months, the stock has underperformed the Nasdaq and the S&P 500, but it has outperformed Sirius XM.
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At the time of this writing, the author had no position in the mentioned equities.
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