Facebook, eBay See Sharp Drops In Short Interest

Between the March 31 and April 15 settlement dates, some of the largest swings in

among the leading social media companies based in the United States happed to

,

and

. Below we take a quick look at how these three stocks have fared recently and what analysts expect from them. That is followed by a glance at the short interest moves in other social media stocks.

After a drop of more than 27 percent in the previous period, short interest in this San Jose, California-based online commerce company declined again, more than 14 percent, to around 15.22 million shares in early April. That was less than 2 percent of the float and the second lowest level of short interest so far this year. In April, eBay was

. eBay's market capitalization is almost $72 billion, and the long-term earnings per share (EPS) growth forecast is almost 10 percent. The operating margin is better than the industry average, but the return on equity is near zero. Of the 41 analysts who follow the stock and were surveyed by Thomson/First Call, 20 recommend buying shares, with 10 of them rating the stock at Strong Buy. Yet, the mean price target, or where analysts expect the share price to go, is less than 5 percent higher than the current share price. Short sellers watched the share price retreat less than 2 percent during the two-week settlement period. It is up more than 5 percent year to date, compared to less than 3 percent for the S&P 500. It has underperformed competitors Amazon.com and Overstock.com, over the past six months.

Shares sold short in this social networking giant fell from a year-to-date high of about 34 million at the end of March to almost 29.30 million by the end of the most recent period. That was more than 1 percent of the float. At the average daily volume, it would take less than two days to cover all short positions. Earlier this month,

. Facebook has a market cap of about $228 billion. While its long-term EPS growth forecast is more than 28 percent and the return on equity is almost 19 percent, the price-to-earnings (P/E) ratio remains very high. Of 50 analysts surveyed, 18 of them rate the stock at Strong Buy, and 26 others also recommend buying shares. A move to their mean price target would represent a gain of more than 14 percent for the shares. That consensus target price would also be an all-time high for Facebook. Facebook shares slipped just a bit during the two-week period, and they continued to decline afterward. The stock still is up more than 4 percent year to date, as well as above the 50-day moving average. Over the past six months, it has underperformed Google and Twitter, as well as the broader markets.

Short interest in the online social games operator jumped more than 14 percent to around 83.68 million shares during the period, or about 11 percent of the float. That was the greatest number of shares short in at least a year. Days to cover dropped from more than five to a little more than three.

. This San Francisco-based company has a market cap of about $2.3 billion. Its long-term EPS growth forecast is about 30 percent, but note that 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. Yet they see plenty of headroom for the stock, as the mean price target is more than 17 higher than the current share price. Note that a sell-off earlier this month contributed to that gap. The share price dropped more than 11 percent in the first weeks of April. As of last week's close, it is down more than 5 percent year to date. Over the past six months, the stock has underperformed not only the likes of Electronic Arts and King Digital, but the broader markets as well.

Short also interest increased in Angie's List, Groupon, LinkedIn, United Online and Yelp in early April, while the number of shares short in Google (C shares) and Pandora were essentially unchanged from the previous period. Short sellers shied away from Google A shares, MeetMe, Shutterfly and Twitter during the two weeks. In addition, note that the number of U.S.-listed shares (or ADSs) sold short of Chinese social media companies Baidu, Renren, Sina, Sohu.com, YouKu Todou and YY grew in the first weeks of April, while short interest in Weibo shrank.

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