In this article, we will be discussing 10 stocks that short sellers are targeting. If you want to take a look at some more stocks attracting short-sellers, you can go to Short Sellers Are Targeting These 5 Stocks.
According to financial analytics firm S3 Partners, short-sellers are up approximately $114 billion in realized and unrealized gains as of January 2022, or an 11.6% rise, despite the stock market’s slide to start the year. The analytics firm shared that 79% of capital invested in short positions made a profit in January. As per S3, declines in software and services companies have resulted in the largest gain across industries, with a 19.2% return for short positions in the first month of the year. Short sellers had a profitable start to the year compared to 2021, when the S&P 500 Index climbed over 27%. Short sellers lost $150.5 billion in realized and unrealized losses last year, or 13.2%, with the most significant losses recorded in the energy and semiconductors industry. Some of the popular stocks that the short sellers are targeting this year include Shift Technologies, Inc. (NASDAQ:SFT), Gogo Inc. (NASDAQ:GOGO), and GitLab Inc. (NASDAQ:GTLB).
Our Methodology
We picked the stocks that are currently being targeted by short sellers. For each stock we have also mentioned its float shorted and the number of hedge funds having stakes in it.
Short Sellers Are Targeting These 10 Stocks
10. Coinbase Global, Inc. (NASDAQ:COIN)
Float Shorted: 4.59%
Number of Hedge Fund Holders: 57
Coinbase Global, Inc. (NASDAQ:COIN) has been in the news recently after famous hedge fund manager Jim Chanos announced that he is shorting the Wilmington, Delaware-based cryptocurrency exchange company as he thinks that it is a bubble stock. The founder of Kynikos Associates rose to fame by placing a correct bet on the collapse of Enron by shorting the stock.
Since the start of the year, the stock price of Coinbase Global, Inc. (NASDAQ:COIN) has plummeted by more than 25%. Peter Christiansen at Citi lowered the price target on Coinbase Global, Inc. (NASDAQ:COIN) from $300 to $275, outlining that Coinbase Global, Inc. (NASDAQ:COIN) is looking forward to increasing investments in 2022 and 2023, which will depress its bottom line. Of the 924 hedge funds in Insider Monkey’s database, 57 held a stake in Coinbase Global, Inc. (NASDAQ:COIN) at the end of Q4 2021.
Coinbase Global, Inc. (NASDAQ:COIN) was mentioned in the Q4 2021 investor letter of Longleaf Partners Fund. Here’s what the fund had to say about the company:
“We also have seen plenty of IPO/SPAC craziness showing both that private players need public markets more than they admit and that there is more volatility embedded in these newer companies than a private quarterly mark might admit. As for how efficient both the private and public markets are, we would encourage you to really delve into some of those multi-hundred-page S1s for many of the newest public companies to see the huge gap between the last valuation at which the company was funded and/or granted shares to its executives and the often much higher price at which the company went public – Coinbase Global, Inc. (NASDAQ:COIN) e is a prime example.”
9. Tesla, Inc. (NASDAQ:TSLA)
Float Shorted: 2.91%
Number of Hedge Fund Holders: 91
Tesla, Inc. (NASDAQ:TSLA) is one of the stocks that the veteran hedge fund manager Jim Chanos has shorted for years. He compared the Austin, Texas-based electric vehicle manufacturer to Cisco Systems, Inc. (NASDAQ:CSCO) at the time of the dot-com bubble.
Chanos highlighted that Cisco was manufacturing routers and other equipment for the internet, and the majority speculated that the tech company would enter different types of businesses, causing the stock to trade at a huge revenue multiple. However, this did not happen, and the stock crashed. Tesla, Inc. (NASDAQ:TSLA) is going through a similar situation with the stock trading at a revenue multiple of 10 times, which is more than double the average of other auto manufacturers. In March, Chanos revealed that he hasn’t covered his position in Tesla, Inc. (NASDAQ:TSLA) and still has “some puts that are out of the money.” At the end of Q4 2021, 91 hedge funds reported owning a stake in Tesla, Inc. (NASDAQ:TSLA). ARK Investment Management is one of the leading investors in Tesla, Inc. (NASDAQ:TSLA), with a stake worth over $2 billion.
Investment management firm Ariel Investments discussed its stance on Tesla, Inc. (NASDAQ:TSLA) in its Q4 2021 investor letter. Here’s what the firm said:
“Within four days in late December, Tesla, Inc. (TSLA)—a 1T— “…gained almost $200 billion in market cap…more than the equivalent of Ford Motor Co. and General Motors Co. combined.” Besides the epic demand for the products and services of these companies in a pandemic, low interest rates helped bloat growth stock multiples—putting a dollar earned in the future on equal footing with one earned today. Against that backdrop, as Barron’s acknowledges, “…investors might as well park money in promising companies whose cash flows won’t ramp up for years.”
8. TaskUs, Inc. (NASDAQ:TASK)
Float Shorted: 4.78%
Number of Hedge Fund Holders: 30
TaskUs, Inc. (NASDAQ:TASK) is a content moderation firm based in the United States that works with companies like Meta Platforms, Inc. (NASDAQ:FB) and DoorDash, Inc. (NYSE:DASH). The company has a short interest change of 1.82 million as of February 28.
In January 2022, Ben Axler’s Spruce Point Capital Management revealed a short position in TaskUs, Inc. (NASDAQ:TASK). The hedge fund shared that the company appears to be “obfuscating growing financial strains” and is exaggerating the size of its business. It also pointed out that TaskUs, Inc. (NASDAQ:TASK) removed employee gross additions in 2019 during the IPO registration process. Spruce Point revealed that the company’s internal employee referral rate has declined from 61% in 2018 to 38% in 2020.
The hedge fund estimates the long-term downside risk to TaskUs, Inc. (NASDAQ:TASK) to be between 25% – 50%. At the end of Q4 2021, 30 hedge funds reported owning a stake in TaskUs, Inc. (NASDAQ:TASK), up from 18 in the preceding quarter.
TaskUs, Inc. (NASDAQ:TASK) was mentioned in the Q4 2021 investor letter of Alger. Here’s what the investment management firm said:
“TaskUs is a modern customer care company that manages digital customer experience exclusively for highly innovative “technology Disruptor” clients. The company’s services include managing end-consumers’’ needs for its clients, such as sales, after sales-support, complaint management, trust and safety and transaction processing. It also provides content security and operations services driven by artificial intelligence.
The stock underperformed in the final three months of 2021 despite the company providing a strong third quarter earnings report. We think the underperformance resulted from the company issuing 25% year-over-year earnings growth guidance for fiscal year 2022, which implies a meaningful deceleration. Additionally, an agreement preventing certain insiders from selling shares expires in the middle of January. The company’s shares, furthermore, have significant ownership by hedge funds, making them subject to year-end rebalancing. Despite the recent weakness, we think the fiscal year 2022 guidance is extremely conservative and the company is currently well positioned for future upward revisions to its earnings estimates.”
7. Heron Therapeutics, Inc. (NASDAQ:HRTX)
Float Shorted: 35.26%
Number of Hedge Fund Holders: 19
Heron Therapeutics, Inc. (NASDAQ:HRTX) is a San Diego, California-based biotech company working on providing acute care and oncology care solutions. The stock has been playing in favor of short-sellers as it has been down nearly 40% since the start of the year. As disclosed in the 13F filings with the Securities and Exchange Commission, Simplex Trading LLC and Kenneth Griffin’s Citadel Advisors LLC reported short positions in Heron Therapeutics, Inc. (NASDAQ:HRTX).
On March 1, Boris Peaker at Cowen slashed the forecasted target price on Heron Therapeutics, Inc. (NASDAQ:HRTX) by more than 58% to $13, as opposed to $31 previously. The analyst highlighted the disappointing Q4 2021 earnings results. Out of the hedge funds being tracked by Insider Monkey, Baker Bros. Advisors is a leading shareholder in Heron Therapeutics, Inc. (NASDAQ:HRTX), with over 8 million shares.
6. Beyond Meat, Inc. (NASDAQ:BYND)
Float Shorted: 36.04%
Number of Hedge Fund Holders: 19
Beyond Meat, Inc. (NASDAQ:BYND) is a plant-based meat substitute company based out of Los Angeles, California, founded in 2009 by Ethan Brown. The stock price of Beyond Meat, Inc. (NASDAQ:BYND) has fallen by more than 26% since the start of 2022. Charles Lemonides, the founder of ValueWorks, has been betting against Beyond Meat, Inc. (NASDAQ:BYND) since October 2021. Over 40% of the company’s shares in January were controlled by short-sellers, and Lemonides expressed his concern over the same.
On March 7, a report issued by Michael Lavery at Piper Sandler highlighted ‘mixed reviews’ for McPlant, a vegan burger introduced by McDonald’s Corporation (NYSE:MCD) that is in the test phase. The vegan burger has been created alongside Beyond Meat, Inc. (NASDAQ:BYND), and such a lukewarm response is not a positive development for the meat substitute company. The analyst has given the company a Neutral rating with a target price of $50. Overall, 19 hedge funds held a stake in Beyond Meat, Inc. (NASDAQ:BYND) at the end of Q4 2021.
Singular Research discussed its stance on Beyond Meat, Inc. (NASDAQ:BYND) in its Q3 2021 investor letter. Here’s what the investment management firm said:
“BYND also was a low performer as the company warned of lower sales in the third quarter due to the delta variant and supply chain disruptions. The firm was also downgraded by Credit Suisse to Underperform from Neutral.”
In addition to Beyond Meat, Inc. (NASDAQ:BYND), Shift Technologies, Inc. (NASDAQ:SFT), Gogo Inc. (NASDAQ:GOGO), and GitLab Inc. (NASDAQ:GTLB) have also hooked the interest of short-sellers.
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Disclose. None. Short Sellers Are Targeting These 10 Stocks is originally published on Insider Monkey.
