Short Report: Bears pile on C3.ai as shortseller torpedoes massive gains

Short interest in C3.ai hits record high as bears follow Kerrisdale Capital allegations of accounting and disclosure issues by company

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 1.0%, the Russell 2000 index was up 2.5%, the Russell 2000 Growth ETF (IWO) was up 2.7%, and the Russell 2000 Value ETF (IWN) was up 2.0% in the four-day trading session range.

SHORT INTEREST GAINERS

• Estimated short interest in C3.ai (AI) was up over three percentage points to 33.9% this week, the highest on record, with shares becoming increasingly volatile this month following a short-sale attack on the company. Riding the wave of generative AI solution deployment, C3.ai shares had tripled year-to-date to $33 by April 3 before a letter from Kerrisdale Capital to the company’s auditor and the SEC alleging “serious accounting and disclosure issues” torpedoed a third of its value. In the four-day period covered, c3.ai shares were down 2.4% this week.
• Estimated short interest in MicroStrategy (MSTR) had been trending gradually lower for much of the year, receding from about 43% last December to as low as 30.5% last week. That short position spiked all the way up to 41% this week however, helped by the breakout in bitcoin from $28,000 to $31,000. In its most recent earnings release in February, MicroStrategy disclosed that it now holds 132.5K bitcoin while stating that its “corporate strategy and conviction in acquiring, holding, and growing our bitcoin position for the long term remains unchanged”. The stock has also tracked the recent rebound in crypto, rising 17.4% in the four-day period covered.
• Ortex-reported short interest in Hyzon Motor (HYZN) rose from a seven-month low of 18.8% earlier in the week to a one-month high of 22.2% by Thursday. The company has remained under pressure for over eight months, with the name falling into penny-stock territory and confronted by Nasdaq listing requirement notices, management turnover, and analyst scrutiny. Last week, a research note from Canaccord reflected on Hyzon’s collection concerns with its auditor preventing recognition of full revenues as well as a slower than expected non-China-based sales ramp. In the four-day period covered through Thursday, Hyzon was down 12%, though Friday’s 12% rally brought the name back to roughly unchanged.

SHORT INTEREST DECLINERS

• Ortex-reported short interest in The Gap (GPS) had reached a record high of 21% as of late last week but has since registered a steep six-point drop to 15% – a six-week low. Days to cover on the name was also down a notable 110 basis points at 2.9. The stock has been under pressure this year along with the majority of consumer cyclical apparel companies, slipping 17% year-to-date, though the steep decline in bearish positioning suggests that expectations of ongoing pressure in consumer cyclical apparel may be receding. Gap shares traded flat in the four-day period covered through Thursday.
• Estimated short interest in Kura Sushi (KRUS) fell from 27% to 23% in the four-day period covered through Thursday after notching a six-month low of 20.4% on Wednesday. The stock was down nearly 20% in the wake of its Q2 earnings report last week, though shares recovered briskly on strong volume this past Tuesday once Kura Sushi secured $63M in equity financing. In the four-day period covered, Kura Sushi shares were up 14% this week.

Keywords: Short selling, short interest, days to cover, securities, lending, utilization, sentiment analysis, MicroStrategy, Hyzon Motor, c3.AI, The Gap, Kura Sushi