Market Overview

Big Short Interest Swings in eBay, Facebook, Yelp

Big Short Interest Swings in eBay, Facebook, Yelp

eBay (NASDAQ: EBAY), Facebook (NASDAQ: FB) and Yelp (NYSE: YELP) saw big upswings in short interest between the March 15 and March 28 settlement dates

Other social media companies based in the United States that also saw the number of shares sold short rise in the period include Angie's List (NASDAQ: ANGI), Groupon (NASDAQ: GRPN) and United Online (NASDAQ: UNTD).

But short sellers shied away from Google (NASDAQ: GOOG), LinkedIn (NYSE: LNKD), Pandora (NYSE: P), Shutterfly (NASDAQ: SFLY) and Zynga (NASDAQ: ZNGA) in the latter two weeks of March.

Also, note that U.S.-listed shares (or ADRs) sold short of Chinese social media companies Renren (NYSE: RENN), Sina (NASDAQ: SINA) and (NASDAQ: SOHU) dropped by double-digit percentages, and YouKu Todou (NYSE: YOUKU) more modestly. But short interest in Baidu (NASDAQ: BIDU) increased somewhat to the end of March.


Short interest in this San Jose, California-based online commerce company increased by more than 25 percent to 12.47 million shares in the final two weeks of March. That is the highest number of shares sold short so far this year, though it represents just over one percent of the float.

In late March, eBay changed its fees for sellers, and it forecast 50 percent revenue growth over next three years. The company has a market capitalization of more than $72 billion. The long-term earnings per share (EPS) growth forecast is more than 15 percent, but the price-to-earnings (P/E) ratio is about 28. The return on equity is less than 14 percent.

Of the 37 analysts who follow the stock that were surveyed by Thomson/First Call, 27 recommend buying shares, 10 of them rating the stock at Strong Buy. The mean price target, or where analysts expect the share price to go, is about 12 percent higher than the current share price. That target would be a new multiyear high.

The share price is up more than six percent in the past month, as well as about 58 percent higher than a year ago. Over the past six months, the stock has outperformed (NASDAQ: AMZN) and the broader markets.


Shares sold short in this social networking giant rose about 13 percent to about 38.99 million, following an increase of about 13 percent in the previous period. The end of March saw the highest level of short interest so far this year, but it was far less than the peak of more than 95 million shares sold short last November.

While fallout over its IPO continued, Facebook continued to update its features and introduced the "Facebook Phone" in late March. The company has a market cap of more than $63 billion. While its long-term EPS growth forecast is about 29 percent, the return on equity is less than one percent and the P/E ratio is in the stratosphere.

Out of 36 surveyed analysts, eight of them rate the stock at Strong Buy and 13 others also recommend buying shares. The mean price target indicates upside potential of about 20 percent. But that target is less than the post-IPO high set back in May.

Facebook shares are trading about five percent lower than at the beginning of the year. But the share price is still more than 35 percent higher than six months ago. In that time, the stock has outperformed Google and the broader markets.


This San Francisco-based company saw short interest increase more than 12 percent in late March to 4.97 million shares, the second highest level of short interest in the past year. The number of shares sold short now represents more than 20 percent of the float, and days to cover is more than six.

Yelp launched a revenue estimation tool for merchants during the period. The company currently has a market cap near $1.5 billion. While Yelp has a long-term EPS growth forecast of about 19 percent, its return on equity is in negative territory. Note that analysts do not expect the company to show a profit until 2014.

For at least three months, the consensus recommendation of the polled analysts has been to hold shares. So, no surprise, their mean price target is hardly any higher than the current share price, meaning they see little potential upside at this time.

The share price has risen about 25 percent year to date, though it is about 15 percent below the 52-week high from last fall. The stock has underperformed Yahoo! (NASDAQ: YHOO) and the broader markets over the past six months.

Posted-In: Angie's List EBAY Facebook Google GrouponShort Ideas Trading Ideas Best of Benzinga


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