Short Report: Carvana short squeeze sends bearish position to 2023 lows

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 down 0.8%, the Russell 2000 index was up 0.3%, the Russell 2000 Growth ETF (IWO) was flat, and the Russell 2000 Value ETF (IWN) was up 0.7% in the five-day trading session range.

SHORT INTEREST GAINERS

• Estimated short interest in Luminar (LAZR) troughed two weeks ago around 24% but has since risen steadily to 27% as of Thursday – the highest level in about four months. Days to cover on the name also sank to a one-month low of 11.8 but hit a one-month high of 13.2 this week in spite of the rise in earnings volume. Trading activity around Luminar has increased with the announcement of former SpaceX and GoPro executives joining the company this week while investors also look ahead to the company’s Q2 earnings announcement this Tuesday. The stock traded up 9.2% in the five-day period covered, though it was up as much as 19% from Thursday close at its peak on August 1st.
• Ortex-reported short interest in Coinbase (COIN) had hit its lowest level since September of 2022 late last week just below 16% but has since ticked higher, rising to 17% as of this Thursday. Meanwhile, the stock has registered its third consecutive week of decline and now sits just marginally higher relative to the levels seen at the time of the crypto-favorable ruling on the SEC complaint around the definition of registered securities transactions in mid-July. The reversal in Coinbase has also come in the wake of the company’s Q2 results that earned the name price target boosts from multiple firms, which looks to be overshadowed by the retreat in crypto prices. In the five-day period covered through Thursday, Coinbase shares are down 2.1%.
• Estimated short interest in Beauty Health (SKIN) had slid to a three-month low of 22.9% late last week when the stock bounced toward the top end of its narrow month-long range, but the selling turned more pronounced this week and the shorts are reconsidering their retreat. Short position as a percentage of free float was up a point to 23.9% as of Thursday, while days to cover rose from 8.6 to 9.6. In the five-day period covered, Beauty Health shares were down 7.8%. The company also reports its Q2 results in the coming week.

SHORT INTEREST DECLINERS

• Ortex-reported short interest in Carvana (CVNA) remained at the top end of the spectrum within our screen but has seen a pronounced pullback this week, sliding from 53.7% to 50.8% – the lowest level since December of 2022. Days to cover on Carvana was down from 1.3 to 0.8, with trading volumes dialed down to a simmer in the second half of July. Carvana had already traded with more conviction going into its Q2 results in mid-July, but a strong print has sparked an even broader short squeeze, and by the end of the month, the stock had nearly doubled. In the five-day period through Thursday this week, Carvana was up 28%, though Friday saw some end of week profit-taking with a 12% retreat.
• Estimated short interest in B. Riley (RILY) is down from 21.8% to 20.2% this week, the lowest level in five months, while days to cover on the name has come off from 19.8 to 16.3, a six-week low, as trading volumes normalized. Shares had also peaked in late July but have since come off in the wake of the company’s closed equity offering and going into its Q2 earnings report this coming Wednesday. In the five-day period covered, B. Riley shares are down 6.2%.