Short Interest Swings In Social Media Stocks

Among the leading social media companies based in the United States,

and

had the greatest upswings in

in late September. Short sellers retreated notably from

though. The number of shares short in Groupon, LinkedIn, Shutterfly and Twitter also increased somewhat between the September 15 and September 30 settlement dates. Short sellers shied away from Angie's List, Google, MeetMe, United Online, Yelp and Zynga during the period, too. In addition, note that the number of U.S.-listed shares (or ADSs) sold short of Chinese social media companies Renren, Sina, Sohu.com, Weibo and YY increased in the first weeks of the month, but short interest in Baidu and YouKu Todou declined. Below is take a quick look at how eBay, Facebook and Pandora have fared and what analysts expect from them.

Short interest in this San Jose, California-based online commerce company shrank by more than 11 percent to more than 20.52 million shares in late September, or less than 2 percent of the float. That more than recaptured the gain in the previous period. The days to cover remained more than one. eBay has a market capitalization near $64.4 billion. It is expected to post double-digit revenue growth in the current year 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, with 12 of them rating the stock at Strong Buy. The mean price target, or where analysts expect the share price to go, is almost 15 percent higher than the current share price. The share price rose more than 11 percent during the two-week settlement period but has retreated more than 8 percent since. The stock has underperformed competitor Amazon.com and the broader markets over the past six months, but it also outperformed Overstock.com.

Shares sold short in this social networking giant increased more than 15 percent to around 42.88 million in the period, or more than two percent of the total float. That was the third consecutive period of rising short interest. At the average daily volume, it would take just over a day to cover all short positions. Facebook is expected to post annual revenue growth of more than 34 percent both this year and next. The company has a market cap of almost $190 billion. While its long-term EPS growth forecast is more than 37 percent, the price-to-earnings (P/E) ratio remains very high. Of 43 analysts surveyed, 14 rate the stock at Strong Buy and 22 others also recommend buying shares. A move to their mean price target would be a more than 16 percent gain in Facebook's shares. Note that the consensus target would be an all-time high for Facebook, which came public in May of 2012. Short sellers watched the shares climb about 6 percent during the short interest period, but the stock has lost most of that gain since, dropping below the 50-day moving average for the first time since May. Over the past six months, the stock has outperformed Google and the broader markets, but it has also underperformed Twitter.

Short interest in this Oakland, California-based Internet radio provider increased more than 15 percent in the final weeks of the month to more than 23.18 million shares. That was almost 12 percent of the total float, as well as the greatest number of shares short so far this year. Days to cover was less than four. The CFO said during the period that Pandora is working to improve relationships with its stakeholders. The company has a market cap of about $4.3 billion and a long-term EPS growth forecast of almost 63 percent. However, both the return on equity and the operating margin remain in negative territory. Of the 31 polled analysts, 23 recommend buying shares, with eight of them rating the stock at Strong Buy. They believe the shares have plenty of headroom, as their mean price target is more than 39 percent higher than the current share price. That target is less than the 52-week high from early March. The share price retreated more than 6 percent during the two weeks, and it has continued to fall since, hitting a new 52-week low on Friday. The stock has not only underperformed the Nasdaq and the S&P 500 over the past six months, but competitor Sirius XM as well.

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