3 Social Media Stocks With Rising Short Interest
Among the leading social media companies based in the United States, eBay Inc (NASDAQ: EBAY), Twitter Inc (NYSE: TWTR) and Zynga Inc (NASDAQ: ZNGA) experienced significant upswings in short interest in early September.
The number of shares short in Angie's List, Facebook, MeetMe and United Online also increased somewhat between the August 29 and September 15 settlement dates. Short sellers shied away from Google, Groupon, LinkedIn, Pandora Media, Shutterfly and Yelp during the period, though.
In addition, note that the number of U.S.-listed shares (or ADSs) sold short of Chinese social media companies Baidu, Weibo and YouKu Todou increased in the first weeks of the month, but short interest in Renren, Sina, Sohu.com and YY declined.
Below we take a quick look at how eBay, Twitter and Zynga have fared and what analysts expect from them.
Short interest in this San Jose, California-based online commerce company grew by more than 10 percent to more than 23.21 million shares in early September, or about two percent of the float. That was the greatest number of shares short since February. The days to cover remained more than one.
eBay has a market capitalization near $65.7 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 39 analysts who follow the stock that were surveyed by Thomson First Call, 23 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 10 percent higher than the current share price.
The share price pulled back more than 8 percent during the two-week settlement period but has recovered somewhat since. The stock has outperformed competitors Amazon.com and Overstock.com, but underperformed the Nasdaq, over the past six months.
Short interest in this micro-blogging service provider increased almost 14 percent. The 24.57 million shares short mid-month represents more than 6 percent of the float, the lowest number of shares short year to date. At the current average daily volume, it would take about a day to cover all short positions.
The consensus forecast so far has revenue for the full year more than double from 2013. The San Francisco-based company has a market cap of about $32.1 billion, and like eBay and Zynga it does not offer a dividend. Note that the return on equity and the operating margin both remain in the red.
The number of Buy ratings has increased in each of the past three months, but the consensus recommendation of polled analysts remains to hold Twitter shares. The mean price target is only marginally higher than the current share price, and it is well less than the 52-week high.
Twitter shares ended the two-week period about where they began, though they have risen since. The stock is still more than 22 percent lower year to date. Over the past six months, Twitter has underperformed Facebook and LinkedIn, but its performance has been in line with the S&P 500.
Short interest in the online social games operator jumped more than 12 percent to around 59.22 million shares during the period, or about 8 percent of the float. That was the greatest number of shares short since May. It would take more than four days to close out all of the short positions.
The new Zynga Poker app was launched during the period. This San Francisco-based company has a market cap of about $2.7 billion. Its long-term EPS growth forecast is about 30 percent, but here too the return on equity and operating margin are still in negative territory.
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. Yet a move to the mean price target would be a gain of about 16 percent for the shares. The consensus target is less than the 52-week high, though.
The share price has bounced between $2.80 and $3.20 since early June. As of Wednesday's close it is down less than 24 percent year to date. 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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