Ebay Inc., Google Inc. & Yelp Inc. See Rising Short Interest
Among the leading social media companies based in the United States, eBay (NASDAQ: EBAY), Google (NASDAQ: GOOGL) and Yelp (NYSE: YELP) experienced significant upswings in short interest in late August.
The number of shares short in Angie's List, Facebook and Shutterfly also increased between the August 15 and August 29 settlement dates, though in Groupon, MeetMe and Twitter it was about the same at the beginning and end of the period.
Short sellers shied away from Google C shares, LinkedIn, Pandora Media and Zynga during the period, though.
In addition, note that the number of U.S.-listed shares (or ADSs) sold short of Chinese social media companies Sina, Weibo and YouKu Todou increased in the latter weeks of the month, but short interest in Baidu, Renren, Sohu.com and YY declined.
Below we take a quick look at how eBay, Google and Yelp have fared and what analysts expect from them.
See also: Instagram Shopping Just Got A Lot Easier
Short interest in this San Jose, California-based online commerce company grew by more than 5 percent to more than 21.00 million shares in late August, or about 2 percent of the float. That nearly erased a decline in short interest in the previous period. The days to cover remained more than one.
eBay has a market capitalization in excess of $63 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 more than 12 percent. The operating margin is better than the industry average, but the return on equity is in the red.
Of the 40 analysts who follow the stock that were surveyed by Thomson First Call, 24 recommend buying shares, 12 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.
As of the close on Wednesday, shares had pulled back more than 7 percent in the past week and were down about 2 percent from a month ago. The stock has outperformed competitors Amazon.com and Overstock.com, but underperformed the Nasdaq over the past six months.
Short interest in A shares of this Mountain View, California-based operator of Google+ and YouTube gained more than 9 percent late in the month to around 3.18 million shares. That was about 1 percent of the float, and it ended a four-period streak of shrinking short interest.
Analysts are looking for double-digit growth on the top and bottom lines for the current quarter. The company has a market cap of more than $401 billion. Its long-term EPS growth forecast is more than 16 percent, and its P/E ratio is less than the industry average. The operating margin is higher than the industry average.
Of the 47 surveyed analysts, 39 recommend buying shares, with 17 of them rating the stock at Strong Buy. They believe the shares have some room to run, as the mean price target is almost 12 percent higher than the current share price. That target would be a new 52-week high.
The share price has risen less than 3 percent in the past month but remains above the 50-day and 200-day moving averages. It is up more than 6 percent year-to-date. The stock has underperformed not only Facebook and Yahoo over the past six months, but the Nasdaq and the S&P 500 as well.
This San Francisco-based company saw its short interest rise almost 6 percent in the final weeks of the month to more than 8.87 million shares, which represents more than 15 percent of the float. That took back a decline in the number of shares sold short in the previous period. The days to cover rose to about two.
Yelp said in August that it plans to open a new office in Chicago. The company has a market cap of about $6 billion. Both its return on equity and operating margin are in the red. Yelp swung to a profit in its most recent quarter, and strong revenue growth is forecast for the current quarter and the next.
For at least three months, the consensus recommendation of the polled analysts has been to buy shares. Analysts see some headroom for shares, as their mean price target is almost 8 percent higher than the current share price. Note that shares traded higher than that as recently as March.
Although short sellers watched shares rise more than 7 percent in the two-week settlement period, the stock has retreated somewhat since. The 50-day and 200-day moving averages formed a death cross during the period. The stock has underperformed 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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