Market Overview

Big Moves In Social Media Short Interest (EBAY, FB, GOOG)

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Big Moves In Social Media Short Interest EBAY, FB, GOOG

Late January saw sizable retreats by short sellers in several social media companies based in the United States, including Facebook (NASDAQ: FB) and Google (NASDAQ: GOOG). However, eBay (NASDAQ: EBAY) bucked that trend.

The number of shares sold short in Groupon, Pandora Media, Yelp and Zynga also shrank by double-digit percentages between the January 15 and January 31 settlement dates.

Short interest in LinkedIn and United Online was little changed from the previous settlement date. And Angie's List, Shutterfly and Twitter saw modest growth of short interest during the period.

In addition, note that the number of U.S.-listed shares (or ADRs) sold short of Chinese social media companies and Baidu, Sohu.com and YouKu Todou shrank in the final weeks of the month, while those in Sina and Renren increased.

Below we take a quick look at how eBay, Facebook and Google have fared and what analysts expect from them.

See also: Twitter Vs. Facebook: What's Your Social Network For 2014?

eBay

Short interest in this San Jose, California-based online commerce company surged by more than 55 percent to about 27.10 million shares in late January. That was the greatest number of shares sold short in the past year and came to more than two percent of the float. Days to cover remained about one.

eBay has a market capitalization of more than $70 billion. It is expected to post double-digit revenue growth in the current quarter and the next. The long-term earnings per share (EPS) growth forecast is more than 12 percent, but the price-to-earnings (P/E) ratio is about 25. The return on equity is less than 13 percent.

Of the 41 analysts who follow the stock that were surveyed by Thomson/First Call, 31 recommend buying shares, 14 of them rating the stock at Strong Buy. The mean price target, or where analysts expect the share price to go, is about 14 percent higher than the current share price.

Shares have traded between $52 and $55 since mid-December and are only about two percent higher than six months ago. The stock has underperformed competitor Amazon.com and the S&P 500 but outperformed Overstock.com over the past six months.

Facebook

After falling more than 22 percent from the previous period, when short interest was the second highest in the past year, the number of shares sold short in this social networking giant totaled more 34.17 million at the end of January. That represented around two percent of Facebook's total float.

Facebook is expected to post annual revenue growth of more than 31 percent both this year and next. The company has a market cap of more than $163 billion. While its long-term EPS growth forecast is more than 31 percent, the P/E ratio remains higher than the industry average.

Of the 44 surveyed analysts, 17 rate the stock at Strong Buy and 21 others also recommend buying shares. Their mean price target indicates more than seven percent potential upside, and it would be a new all-time high for Facebook shares.

The share price has jumped about 16 percent in the past month, primarily due to it better-than-expected earnings report, and reached another 52-week high on Tuesday. Over the past six months, the stock has outperformed the likes of Google, Twitter and Yahoo!

See also: The Twitter Effect On ETFs

Google

Short interest in this Mountain View, California-based operator of Google+ and YouTube dropped more than 30 percent in the period to around 2.73 million shares, or about one percent of the float. That was the third straight period of decline, as well as the lowest number of shares short in the past year.

The company has a market cap near $398 billion but does not offer a dividend. It has a long-term EPS growth forecast of almost 17 percent, though its P/E ratio is around 31. Google's operating margin is higher than the industry average, and its return on equity is almost 16 percent.

Of the 44 polled analysts, 32 recommend buying shares, with 11 of them rating the stock at Strong Buy. However, they see no headroom for shares, as the share price has overrun their mean price target. The current share price is even higher than the street-high price target.

Shares are trading near a multiyear high, and the share price is about seven percent higher year to date. Over the past six months, the stock has outperformed the broader markets but underperformed the likes of Yahoo! and Facebook.

At the time of this writing, the author had no position in the mentioned equities.

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

 

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