Peloton Short Seller Losses Approach $600M In 2020 Following Blowout Q4

After Peloton Interactive, Inc.'s PTON blowout fourth-quarter report, S3 Partners analyst Ihor Dusaniwsky said traders can expect the year-long short squeeze in Peloton to continue for now.

The stock is up more than 200% in 2020. 

On Thursday, Peloton reported 172% revenue growth and $89.1 million in profit in the fourth quarter.

In the same quarter a year ago, Peloton reported a net loss of $47.4 million. Net subscribers for the quarter were up 113% to 1.09 million.

Peloton has $492 million in short interest representing about 2.7% of its float, according to Dusaniwsky. Peloton has the most short interest of any stock in the leisure products group.

Peloton Shorts Squeezed: Peloton’s short interest has been steadily declining as the stock has rallied throughout the year, Dusaniwsky said.

In the last month alone, he said Peloton short sellers have covered 1.74 million shares of their position as year-to-date losses have mounted.

In the week leading up to the earnings report, Peloton short interest increased by about 8%.

Year-to-date, Dusaniwsky said Peloton short sellers have endured $575 million in net-of-financing, mark-to-market losses, including another $82 million in September losses through Thursday’s close.

Peloton short sellers have been subjected to a long-term short squeeze all year as their losses have continued to mount, and the company’s earnings report likely won’t change that dynamic, he said. 

“Today’s earnings results will do nothing to stop the squeeze, but rather the results and guidance will probably turn up the resistance knob and force out even more shorts,” Dusaniwsky said Thursday.

PTON Price Action: Peloton shares were down 3.37% at $84.79 at last check Friday. 

Benzinga’s Take: Short sellers obviously didn’t get what they were hoping for in the Peloton earnings report.

Yet they may find reason for optimism in the fact that the stock is reacting so little Friday to such big numbers — a potential indicator that some Peloton investors may be taking profits on their positions.

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Photo courtesy of Peloton. 

Posted In: Ihor DusaniwskyS3 PartnersAnalyst ColorShort IdeasAnalyst RatingsTrading Ideas