Short Interest Updates On NQ Mobile, Twitter And Plug Power
Chris Benedict, lead analyst of DataLend, gave Benzinga his updates on short interest for three of the hottest stocks in the market.
A Muddy Waters report on fraudulent activity sent shares down nearly 50 percent in one session last October. Almost every shortable share available was in use following the report, driving up fees to borrow them.
Benedict commented on NQ Mobile’s activity since the Muddy Waters allegation, “We have seen fees drop off a bit from October to around early to mid April, then we saw fees surge again briefly.”
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Fees to borrow have been trending lower again since then, despite a brief rise Wednesday following an independent investigation, which seems to have cleared NQ’s name. Both short interest and utilization rose by about one percent on the news, according to Benedict. The utilization rate is now 92 percent.
Shares of Twitter (NYSE: TWTR) crashed when the company announced bad earnings and its lockup period ended. Short selling rose upon the news: “We saw utilization spike to almost 97 percent, so really every usable share was in use,” Benedict continued, “then we had it drop to 50 percent by middle of May, which is a pretty big drop.”
The fast drop in short interest is continuing; only 25 percent of shares are currently utilized.
A big takeaway from this data is that shorts were aggressively covering their positions. Nonetheless, the price of the stock remained relatively constant.
Benedict described that short interest was steadily rising and exploded higher on the announcement that Wal-Mart had placed a large order for Plug Power's fuel cells. Utilization hit 99 percent, meaning the only way shares could come down from such a fast incline is longs cutting their stakes.
Although some shares are now available to short, financing the position is very expensive. According to Benedict, a $1.5 million position would cost about $4,000 every day.
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