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Short Interest In Twitter Plunges, In eBay Still Rising

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Short Interest In Twitter Plunges, In eBay Still Rising

Internet companies are often a magnet for short sellers. Recent short interest is recapped below, with a close up look at eBay (NASDAQ: EBAY), Google (NASDAQ: GOOGL) (A shares) and Twitter (NYSE: TWTR).

Among the leading internet companies based in the United States, eBay, Google (A shares) and Twitter saw the largest swings in short interest in late May.

The number of shares short in Groupon, Google (C shares), Shutterfly, United Online and Yelp grew moderately between the May 15 and May 30 settlement dates. But short sellers shied away from Angie's List, Facebook, LinkedIn, Pandora Media and Zynga during the period.

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

See also: eBay's PayPal President Steps Down

Here's a quick look at how eBay, Google and Twitter have fared and what analysts expect from them.

eBay

Short interest in this San Jose, California-based online commerce company grew by more than 16 percent to more than 19.27 million shares in late May, or less than two percent of the float. That was on top of a more than 10 percent rise in short interest in the previous period. The days to cover remained more than one.

eBay has a market capitalization in excess of $61 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. The operating margin is better than the industry average, but the return on equity is in the red.

Of the 40 analysts who follow the stock that were surveyed by Thomson/First Call, 25 recommend buying shares, 12 of them rating the stock at Strong Buy. The mean price target, or where analysts expect the share price to go, is more than 21 percent higher than the current share price.

As of the close on Tuesday, shares had pulled back almost two percent in the past month. The 50-day and 200-day moving averages form a death cross in late May. The stock has outperformed competitors Amazon.com and Overstock.com, but underperformed the Nasdaq, over the past six months.

Google

Short interest in A shares of this Mountain View, California-based operator of Google+ and YouTube jumped about 28 percent late in the month to around 3.95 million shares. That was more than one percent of the total float, and the fourth period in a row of growing short interest. Days to cover is two.

Analysts are looking for double-digit growth on the top and bottom lines for the current quarter. The company has a market cap of more than $383 billion. Its long-term EPS growth forecast is almost 16 percent, though its P/E ratio is greater than the industry average. Google's operating margin also is higher than the industry average.

Of the 46 surveyed analysts, 35 recommend buying shares, with 13 of them rating the stock at Strong Buy. They believe the shares have plenty of headroom, as the mean price target is about 14 percent higher than the current share price. That target would be a new multiyear high.

The share price has risen more than eight percent in the past month and is well above the 50-day and 200-day moving averages. But the stock has underperformed not only Facebook over the past six months, but the Nasdaq and the S&P 500 as well. It did outperform Yahoo in that time.

See also: Twitter Surges on Growing User Base

Twitter

Short interest in this micro-blogging service provider shrank more than 36 percent. The 41.08 million shares short at the end of May represents about eight percent of the float, the lowest number of shares short since February. But the days to cover dropped to about one.

An Asia growth forecast and news of a deal led to analyst upgrades in late May. The San Francisco-based company has a market cap of more than $20 billion, but like eBay and Google does not offer a dividend. Note that the return on equity and the operating margin both remain in negative territory.

Only eight of the 31 analysts surveyed recommend buying Twitter shares. For at least three months the consensus recommendation has been to hold shares. The analysts' mean price target is more than 19 percent higher than the current share price, but that is well less than the 52-week high.

Twitter's share price is more than seven percent higher than a month ago, but it is still down about 49 percent year-to-date. Over the past six months, the stock has underperformed Facebook, Google, the Nasdaq and the S&P 500. However, the stock's performance is in line with LinkedIn.

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 Baidu EBAY Facebook GoogleShort Ideas Trading Ideas Best of Benzinga

 

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