Short Report: Bears pile on bad news from GameStop and Coinbase

Short interest on GameStop, CoinBase at multi-week highs as bears press positions after fresh rounds of bad news

Welcome to this week’s installment of “The Short Interest Report" – The Fly’s weekly recap of short interest trends among some of the most widely followed high-short-float stocks. Using the data from our partner Ortex.com, which utilizes the latest information from stock lenders to estimate short interest changes for thousands of publicly traded companies, this report will screen for some of biggest changes in short interest as a percentage of free float and days-to-cover ratios while also considering the short interest data on some of the more volatile and heavier-traded names of the week. Based on the availability of data from Ortex, the report tracks the trading period that covers prior Friday through Thursday of this week, excluding holidays. As a basis of comparison for stocks discussed below, the S&P 500 index was up 1.7%, the Russell 2000 index was down 0.3%, the Russell 2000 Growth ETF (IWO) was up 5.7%, and the Russell 2000 Value ETF (IWN) was up 7.3% in the five-day trading session range.

SHORT INTEREST GAINERS

• Estimated short interest in GameStop (GME) jumped from last week’s low of 18.3% last Friday to 22% as of Thursday – the highest level since March 28th. Bears remain enthused and built on their positions despite the disappointing Q1 earnings report by GameStop this week, when the stock fell nearly 20% and replaced its CEO Matthew Furlong, naming the high-profile board chairman and investor Ryan Cohen as “executive Chairman”. A research note from Wedbush after the announcement reaffirmed the firm’s conviction that the company is “doomed” given its disappointing sales and modest losses. In the five-day period covered, GameStop was down 11% through Thursday, though the stock rose 5.8% on Friday.
• Estimated short interest in Coinbase (COIN) saw its lowest level of the year early last week at 17.7%, but bearish position has since increased to 21% – within one percentage point of its three-week high. Shortsellers were keen to increase their exposure on Coinbase as the stock fell following the disclosed suit against the company by the SEC claiming that it improperly acted as an unregistered broker, though the management also replied to the allegations with confidence in the “facts and the law” being on the side Coinbase. In the five-day period covered, Coinbase was down 13.6% through Thursday.
• Ortex-reported short interest in Guess (GES) tracked in a narrow 24%-26% band since May 9 but jumped from 25.4% to as high as 31.4% this week – a record high – before settling at 29.5% on Thursday. Days to cover on Guess also spiked as high as 9.2 – a nine-month high. We featured the name four weeks ago when the short interest on Guess reached an eight-month high of 25% and the stock price was around the bottom of its two-month range, and bearish appetite has only grown in spite of the company’s earnings beat and guidance raise that drove more upside in shares. In the five-day period covered, Guess was up 10.5% through Thursday.
• Estimated short interest in Janux Therapeutics (JANX) had been nudging higher for the past four months, rising from 14% in January to 27% by May end. This week however, the short position as a percentage of free float spiked all the way to 44.8% – a record high. Trading volumes on the stock have been fairly light, though the stock has risen 9.3% in the five-day period covered.

SHORT INTEREST DECLINERS

• Ortex-reported short interest in C3.ai (AI) fell from 29.8% to 26.9%, within a percentage point of the lowest level in bearish activity in about three months. The stock has been lifted by the rising tide of "all things AI" over the past month, having doubled in value from its three-month lows in early May and tripled year-to-date, with especially pronounced gains coming after the recent blowout earnings report from Nvidia, and the bears on the name appear to be cutting bait.   In the five-day period covered through Thursday, C3.ai shares were up another 4.3%.

Keywords: Short selling, short interest, days to cover, securities, lending, utilization, sentiment analysis, Gamestop, Guess, Coinbase, Janux Therapeutics, c3.ai