First Republic Bank, Transocean – Two Heavily Shorted Stocks Down Significantly In Early Session On Tuesday

The SPDR S&P 500 ETF SPY traded in a very tight range last week, leaving traders perplexed with regard to near-term market momentum. On Tuesday morning, however, the S&P has softened up slightly, and continued losses on the day may be an indicator that stocks have put in a near-term top. From a technical perspective, this would align with the charts as SPY is sitting right at levels that provided resistance in early December 2022 and early February 2023 – between roughly $408.00 and $416.00. Two stocks that are seeing big losses early in the session and have very high short interest are First Republic Bank FRC and Transocean RIG. 

First Republic Bank (FRC)

First Republic has been at the center of the banking crisis that roiled global markets back in March. Despite hopes – and the appearance – that a more devastating daisy chain of financial contagion has been averted, FRC shares have lost over 90% of their value in 2023 and are plunging on Tuesday morning once again after the bank reported its Q1 results. Given the price action in the stock, the headlines being generated in the wake of First Republic’s earnings report, and management’s reticence to provide investors with any confidence whatsoever, it would appear that FRC is far from out of the woods. The New York Times reported that the bank lost $102 billion in customer deposits compared to the $176 billion it held at the beginning of 2023. Furthermore, management did not take questions and provided little forward visibility. At last check, FRC was down 28% on the day to $11.50 and short interest is trending above 30%. 

Transocean (RIG)

This is another stock that traders may want to keep an eye on this week, although the circumstances surrounding RIG are quite different from FRC. The company is set to release its quarterly results next Monday. Wall Street is anticipating the driller to post a per-share loss of $0.20. Although shares are up almost 40% in 2023, Transocean has been a tremendous underperformer ever since shares reached an all-time high of $160.00 in May 2008, prior to the financial crisis. On Tuesday, RIG was trading down around 4% as of this writing and is being heavily shorted heading into next week’s earnings report. At last check, short interest in the name was around 21%. 

Featured photo by Alexander Mils on Unsplash.