Short Report: Bears bite into Krispy Kreme after another weak earnings report

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 1.3%, the Nasdaq Composite was down 1.0%, the Russell 2000 index was down 2.4%, the Russell 2000 Growth ETF (IWO) was down 1.1%, and the Russell 2000 Value ETF (IWN) was down 3.0% in the five-day trading session range through May 22.

SHORT INTEREST GAINERS

• Otex-reported short interest in Krispy Kreme (DNUT) continues to soar as its stock continues to sink following another disappointing earnings report by the company on May 8th. Shorts as a percentage of free float jumped five percentage points to a record high of 32.2, with days to cover also increasing from 5.1 to 5.8 despite the spike in trading volume post-earnings. The company missed on the top line in Q1, offered below-consensus Q2 guidance, and also pulled its FY25 guidance due to “macroeconomic softness and the uncertainty around the McDonald’s deployment schedule”. The stock was 8% in the five-day period covered through Thursday, but has fallen 33% overall from levels just prior to Q1 earnings and is now down over 70% year-to-date.
• Shares of Rocket Companies (RKT) treaded water this week as the run-up in interest rates appeared to slow, though – as highlighted last week – the propulsion in Ortex-reported short interest on the stock is persisting despite the absence of pronounced pressure in price. Shorts as a percentage of free float on the stock was up another six percentage points to hit a four-year high above 44% and days-to-cover extended its increase by a decimal to 7.2. Shares, meanwhile, were down just 1.5% in the five-day period covered, and the year-to-date tally on Rocket is still a robust 13%.
• Ortex reported short interest in Neurogene (NGNE) had trended largely sideways from the last week of April through the middle of May just shy of the 60% level, though this past week has seen a spike all the way up to 87%. Volume has receded, though days-to-cover on the stock slipped from 17.3 to 15.3. The stock has had a positive couple of weeks, with a higher thrust on May 15th as Baker Bros Advisors disclosed a 10% stake and then earning a higher price target from BMO after an oral presentation at the American Society of Gene and Cell Therapy annual meeting describing a monitoring / treatment algorithm intended to reverse hyperinflammatory syndrome hemophagocytic lymphohistiocytosis. In the five-day period covered, Neurogene was down 6.9%, though relative to its April 8 low, the stock has more than doubled.
• Gains in Ortex-reported short interest in 1-800-Flowers (FLWS) have accelerated while the stock continued to track lower after reporting its Q3 results on May 8. Shorts as a percentage of free float rose sharply this week, increasing from 56% to about 67% – a record high. The stock, meanwhile, was up 2% in the five-period covered through Thursday, but including Friday’s 4% loss, shares of 1-800-Flowers are now down 19% post earnings and 43% year-to-date.

SHORT INTEREST DECLINERS

• Ortex-reported short interest on Madrigal Pharmaceutical (MDGL) receded from about 40% to a 10-month low below 32% and days-to-cover slipped from 6.6 to 6.1 as bears chose to book profits in the stock following this month’s pullback. Madrigal shares slipped 12% over the 4-day period after its Q1 results on May 1 and are now down 20% from levels heading into those earnings, even though its loss was narrower than expected and several sell-side firms boosted their price targets due to strong Rezdiffra product sales. In the five-day period covered through Thursday, the stock was down 13%.