Short selling data can help investors avoid major losses. Short sellers tend to be sophisticated, high-conviction traders. If they’re targeting a stock, there’s usually a good reason they are doing so.
Here, we are going to highlight some bearish short selling activity at EVgo Inc (EVGO:US). EVgo is an American company that owns and operates electric vehicle (EV) charging stations. It currently has more than 850 fast charging stations in more than 30 US states. The company is listed on the Nasdaq and has a market cap of $2.8 billion at present.
EVgo: High Short Interest
Looking at the short selling data on EVgo, we see two major red flags. The first is that short interest is sky-high. At present, 31.07 million EVGO shares are on loan. That represents about 45.2% of the free float. This tells us that there are a lot of institutional investors who are bearish here at the moment.
The second is that the number of shares on loan is rising rapidly. At the start of June, 22.7 million shares were on loan here. Since then, the figure has increased by 40%. This tells us that the short sellers are ramping up their downside bets here.
It’s also worth noting that utilization – a measure of demand from short sellers – is 100% while the cost to borrow stock is 30.8%. This indicates that demand for the stock from short sellers is extremely high right now.
Short Selling Attack
EVgo was recently the subject of a scathing short selling report from research firm Fuzzy Panda Research.
In its report, Fuzzy Panda claimed that:
- Charger utilization has declined since 2019.
- A research study showed that 25.5% of EVgo’s chargers are broken.
- A key patent was declined in 2022.
- EVgo only spends $2 million a year on R&D.
- The company has hidden connections to Jeffrey Epstein and ‘questionable’ partners.
In summary, Fuzzy Panda described EVgo as a "mediocre EV charging company” that it believes is “substantially overvalued."
Now, EVgo did respond to Fuzzy Panda, stating that the short seller's report is filled with “numerous inaccuracies, mischaracterizations, and outright lies." So, the report may not be entirely accurate.
However, the high level of short interest here tells us that Fuzzy Panda is not the only firm that is bearish on the stock right now.
Given the high level of short interest, we think caution is warranted towards EVgo stock at present.