Short Sellers Favor LinkedIn And Pandora Media
Among the leading social media companies based in the United States, LinkedIn Corp (NYSE: LNKD), Pandora Media Inc (NYSE: P) and Zynga Inc (NASDAQ: ZNGA) had the greatest upswings in short interest in early October.
Shares short in Angie's List, Google, Groupon and Shutterfly also increased somewhat between the September 30 and October 15 settlement dates. Short sellers retreated from eBay, Facebook, MeetMe, Twitter, United Online and Yelp and during the period, though.
Furthermore, note that the number of U.S.-listed shares (or ADSs) sold short of Chinese social media companies Renren, Sina, Sohu.com, Weibo and YouKu Todou increased in the first weeks of the month, but short interest in Baidu and YY and declined.
Below we take a quick look at how LinkedIn, Pandora and Zynga have fared recently and what analysts expect from them.
Short interest in this online professional network operator swelled more than 26 percent to about 8.00 million shares in the first two weeks of the month. That was the highest number of shares short in the past year, and it represented more than 7 percent of the float. Days to cover was about five.
The CEO of this Mountain View, California-based company told Bloomberg in the period that it learned a lot from its expansion into China. LinkedIn has a market capitalization of less than $25 billion, and its long-term earnings per share (EPS) growth forecast is about 39 percent.
Of the 37 analysts surveyed by Thomson/First Call, 27 recommend buying shares, while the rest recommend holding them. The mean price target, or where analysts expect the share price to go, is more than 15 percent higher than current share price, though it is also less than the 52-week high.
The share price fell almost 4 percent during the two-week period and has recovered a bit since, but it remains below the 50-day moving average. Over the past six months, the stock has underperformed Facebook, though it outperformed the broader markets and Google.
On top of a more than 15 percent gain in the previous period, short interest in this Oakland, California-based Internet radio provider increased again, almost 13 percent, early in the month to more than 26.18 million shares. That was more than 13 percent of the total float. Days to cover was about four.
During the first weeks of October, Pandora announced a partnership with Ford Australia. The company has a market cap of a little over $4 billion and a long-term EPS growth forecast of almost 63 percent. However, both the return on equity and the operating margin remain in negative territory.
Of the 32 polled analysts, 24 recommend buying shares, with eight of them rating the stock at Strong Buy. They believe the shares have plenty of headroom, as their mean price target is more than 37 percent higher than the current share price. That consensus target is less than the 52-week high though.
The share price retreated more than 9 percent during the two-week period, and it has fallen further since, hitting a new 52-week low on Friday. The stock has not only underperformed the Nasdaq and the S&P 500 over the past six months, but competitor Sirius XM as well.
Short interest in the online social games operator rose more than 7 percent to more than 62.69 million shares during the period. That was more than 8 percent of the float, as well as the greatest number of shares short since mid-May. It would take more than two days to close out all of the short positions.
This San Francisco-based company launched its revamped Words With Friends game in early October. Zynga has a market cap around $2 billion. Its long-term EPS growth forecast is about 30 percent, but here too the return on equity and operating margin are in negative territory.
For at least three months, the analysts' consensus recommendation has been to hold shares of Zynga. The stock has more Underperform ratings than buy recommendations. Yet, a move to the mean price target would be a gain of more than 32 percent for the shares. The consensus target is less than the 52-week high, though.
The share price ended the period down more than 15 percent from where it began, but it has risen 4 percent since. It remains well below the 50-day and 200-day moving averages. Over the past six months, the stock has underperformed not only the likes of Electronic Arts and Facebook, but the broader markets as well.
At the time of this writing, the author had no position in the mentioned equities.
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