AI Stock Symbotic Has a High Level of Short Interest

Short selling data can help active investors avoid losses. If a stock has a high level of short interest, it can indicate that there is significant downside risk.

In this report, we are going to look at the short interest data on Symbotic Inc (SYM:US). Symbotic is an automation technology company that offers an end-to-end, AI-powered robotics and software platform, and has a partnership with Walmart. It’s listed on the Nasdaq and currently has a market cap of around $22.86 billion.

High Short Interest

Looking at the short selling data on Symbotic, we see a couple of red flags.

One is that short interest is very high. At present, 7.31 million SYM shares are on loan. That represents 24% of the free float. Utilization is 96.95% which indicates that the short sellers are shorting every share they can get their hands on right now.

The other red flag is that short interest has spiked in recent months. Since mid-March, the number of shares on loan has jumped from around 1.5 million to 7.4 million – an increase of nearly 400%. Typically, sharp spikes in short interest like this are very bearish.

High Valuation

As for why the short sellers are targeting Symbotic, it’s most likely a valuation issue.

This year, the stock has had a huge run (241.94%) on the back of the AI boom. As a result, it now has a very lofty valuation. Currently, Wall Street analysts expect the company to generate earnings per share of -$0.04 for 2023. That puts the stock on a forward-looking P/E ratio of about -1,000 at present.

One short seller who clearly doesn’t believe that the technology company is worth this multiple is NINGI Research. In a recent research report, it stated that Symbotic is not the cutting-edge company it claims to be. The short seller went on to say that Symbotic’s products do not offer any innovation and that its stock is “uninvestable”.

Given the high level of short interest here, we think caution is warranted towards the stock right now. It’s generally not smart to bet against the short sellers.