In 2022, short interest data proved to be a very powerful investment tool. Over the course of the year, many heavily-shorted stocks lost 50% or more of their value.
At 2iQ Research, short interest data is a major part of our offering, and we monitor it continuously, warning investors whenever we see short sellers aggressively targeting stocks. With that in mind, here’s a look at some of our top short interest calls from 2022.
Our best short interest call last year was in relation to British electric vehicle (EV) manufacturer Arrival Group (ARVL:US).
Here, we published a report in February in which we noted that short interest was high at 20% and that the number of shares on loan had jumped nearly 60% in the previous month. We viewed the sharp spike in short interest as a red flag.
It’s fair to say that the short sellers cleaned up here as between the date of our report and the end of 2022, Arrival stock fell a staggering 96%.
The fall in the stock price was the result of a challenging environment for EV start-ups, large losses, liquidity concerns, and the general valuation compression across the stock market.
EV manufacturer Mullen Automotive (MULN:US) was another top short selling call last year.
Here, we noted in April (shortly after the stock was targeted by short seller Hindenburg Research) that short interest was high at around 23% and that short sellers had been ramping up their downside bets aggressively.
At the time of our report, Mullen Automotive stock was trading near $2.47. However, it ended the year roughly 88% lower at $0.29. So, the short sellers clearly got it right here.
Mullen’s share price fall was the result of a valuation compression as well as concerns over a $92 million “stalking horse” asset purchase bid for insolvent EV start-up Electric Last Mile Solutions.
Bed Bath & Beyond
In April we also published a short interest report on US retailer Bed Bath & Beyond (BBBY:US). Here, we noted that short interest was high at 28% and that the number of shares on loan had risen dramatically since the beginning of 2022.
At the time of our report, BBBY shares were trading near $17.50. However, they ended the year at $2.51, roughly 86% lower.
The substantial share price fall here was related to challenging business conditions, larger-than-expected losses, concerns over the company’s cash burn, and news that investor Ryan Cohen had offloaded all his BBBY stock.
FinTech start-up Upstart Holdings (UPST:US) was another stock we covered in April. Here, we noted that 35% of the free float was on loan and that short interest had surged roughly 600% in the space of a few months. We viewed the spike in short interest as a red flag.
At the time of this report, Upstart was trading just under $100. However, it ended the year at $13.22. That represents a decline of around 86%. So, the sharp rise in short interest noted in April was a powerful signal in hindsight.
This stock was hit by a succession of very poor quarterly results and news that the company had customer loans on its balance sheet.
In February, we covered plant-based meat company Beyond Meat (BYND:US). Here, we noted that short interest was high at 34%.
At the time of our report, BYND stock was trading at around $64. However, it ended the year at $12 – 81% lower.
Declining revenues, substantial losses, competition from rivals, a stalled partnership with McDonalds, and a waning interest in plant-based meat were some of the key drivers of the fall in Beyond Meat’s share price.
In January, we highlighted the short interest data on exercise bike manufacturer Peloton Interactive (PTON:US). At the time, short interest was only 9%, which is not overly high. However, we were concerned that the number of shares on loan had doubled in the space of around three months.
At the time of our report, Peloton stock had fallen around 80% over the previous 12 months. However, that didn’t stop it falling further. Between the date of our report and the end of 2022, the stock fell another 75%.
Lower demand for its products, product recalls, wider-than-expected losses, and liquidity concerns were some of the main drivers of the large share price decline here.
Finally, we have EV manufacturer Rivian Automotive (RIVN:US). This is another stock we highlighted in January. At the time, short interest was around 20%.
When we covered Rivian, the stock was trading near $65. However, it ended the year at $18.
Supply chain and cost issues, cuts to production guidance, the offloading of stock by partner Ford, and valuation concerns were some of the main drivers of the share price fall here.
Short Interest Data Is a Powerful Investment Tool
These short selling reports show how short interest data can add a lot of value for active investors. Armed with this powerful form of data, investors can better manage portfolio risks. They can also potentially take advantage of investment opportunities on the downside.
Want to delve deeper? Contact us today to find out more about 2iQ’s data and analytics offering, including our comprehensive short squeeze model.
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