Short Selling

Short Selling Report: Peloton Interactive Inc (PTON:US)

Peloton Interactive Inc
(PTON:US)
12 months:
-81%
Activity:
Bearish
Pattern:
Rising short interest
News:
Poor results
Peloton Interactive Inc
(PTON:US)
12 months:
-81%
Activity:
Bearish
Pattern:
Rising short interest
News:
Poor results

Short selling data can help active investors avoid losses. Short sellers tend to be very smart, high-conviction traders. If they’re shorting a stock, there’s usually a good reason they are doing so.

In this report, we are going to analyze the short selling data on Peloton Interactive Inc (PTON:US). Peloton is an American company that sells technology-enabled exercise equipment and operates a connected fitness platform. Through its platform, customers can enjoy immersive, instructor-led boutique fitness classes. The company is listed on the Nasdaq Global Select Market and currently has a market capitalization of $10.3 billion.

Peloton Interactive Inc: Short Selling Activity

Looking at the short selling data on Peloton, a couple of things stand out to us.

The first is that short interest is relatively high. At present, around 26.53 million Peloton shares are on loan. That represents roughly 8.8% of the free float.

Different short selling measures are depicted in this diagram, which gives shorting statistics.

The second thing that stands out is that the number of shares on loan has risen significantly over the last three months. Back in mid-October, approximately 13 million Peloton shares were on loan. However, since then, the figure has climbed by more than 100% to 26.53 million. This is a red flag, in our view. It suggests that shorters are ramping up their downside bets here. In other words, they are targeting the stock more aggressively.

Short Selling Chart which measuring shorting statistics - Peloton Interactive Inc

Short Sellers See Further Downside

Peloton shares have had a terrible run over the last year, falling by around 80%.

One reason for this is that sentiment towards highly-priced ‘stay-at-home stocks’ has deteriorated significantly.

Another driver of the fall has been poor results. In November, Peloton posted a huge loss for the first quarter of its fiscal 2022 and reduced its full-year sales guidance by roughly $1 billion. It’s worth noting that the short sellers increased their short bets prior to the results and therefore cleaned up when the share price tanked.

The recent increase in short interest here suggests that the short sellers see further downside from current levels. Even though the share price is down 80% over the last year, they expect it to keep falling.

Given the rising level of short interest here, we continue to think caution is warranted towards Peloton stock at present.

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