Short Report: Reddit short positioning at record highs

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 0.7%, the Nasdaq Composite was down 2.3%, the Russell 2000 index was up 3.4%, the Russell 2000 Growth ETF (IWO) was up 2.2%, and the Russell 2000 Value ETF (IWN) was up 4.5% in the five-day trading session range through July 18.

SHORT INTEREST GAINERS

• Estimated short interest in Reddit (RDDT) has tracked the ascend of the stock price since its March IPO, though the past month has seen an especially consistent expression of bearish appetite, with shorts as a percentage of free float remaining north of 15%. This week, short interest registered new record highs, rising from about 27% to 29%, while days to cover on the name extended its own uptrend from 2.9 to 3.2. The stock carved out an all-time high on Monday above $78 per share before tracking the correction in Internet Services names lower – Reddit was down 6.2% in the five-day period covered, even though shares remain up 32% since their trading debut this year.
• Ortex-reported short interest in A-Mark Precious Metals (AMRK) troughed around 20% in the first week of July but has since risen for two consecutive weeks. This week, shorts as a percentage of free float jumped from 21.6% to 28.3%, eclipsing the late-April high of 26.5% and registering the highest level on record for the company. The stock has also had an impressive month of July, gaining 13% this month and 2.7% in the five-day period covered through Thursday. Shares are also up 42% since the start of March, tracking a more pronounced bullishness in precious metals.
• Estimated short interest in Kura Sushi (KRUS) had been rangebound in a 28%-30% band from mid-April, though the decisively more negative tilt in the company’s growth narrative over the past several weeks has also reignited the upward trajectory in bearish appetite. The company had negatively pre-announced Q3 sales and comps in late June that drove a 23% drop in the stock price and followed that up with an earnings miss on July 9th, which prompted multiple sell-side price target cuts and more downside in shares. Short positioning as a percentage of free float has now risen for three consecutive weeks, and this week, the slope has steepened, with short interest rising from 31% to record-high 33% and days to cover up from 6.2 to 7.9. Meanwhile, the stock, down 5.2% in the five-day period covered, is now off by 37% since its June pre-announcement and down by 58% since its late-March peak.

SHORT INTEREST DECLINERS

• Ortex-reported short interest in Applied Digital (APLD) had trended south since the first week of June, when its peak nearly matched record-high above 27%. Since then, shorts as a percentage of free float were down for four consecutive weeks to a low of 16.7% on July 8th, and after last week’s thrust higher to 20.5%, bearish bets were once again pared to 17.2% by Thursday. In the five-day period covered meanwhile, the stock was off by just over 3%, though shares have been on a tear since mid-June and arguably facilitated the short-covering – Applied Digital is up 37.5% since the upswing began in earnest on June 13 and also up 140% from its mid-April lows.