Will the bear be hit again? Many US stocks that have been seriously shorted have risen strongly

Zhitong Finance ·  Jan 23 03:01

Source: Zhitong Finance

Some US consumer stocks, which have been severely shorted, rose on Monday.

Some US consumer stocks, which have been severely shorted, rose on Monday.

Among them, American electric vehicle manufacturers$Fisker (FSR.US)$The stock closed up more than 17% on Monday, and the stock rose more than 40% in early trading. According to the news, Fisk reached an agreement with institutional investors on convertible notes.

$Spirit Airlines (SAVE.US)$The closing price rose by more than 19%, and outsiders speculated that the airline would join$JetBlue Airways (JBLU.US)$Merge. Late last Friday, the two companies said they would appeal an antitrust ruling from a federal judge blocking their merger. According to information, JetBlue has agreed to buy Spirit Airlines for $3.8 billion, which will make the company the fifth largest airline in the US.

Other stocks that have been seriously shorted also showed strong performance.$Plug Power (PLUG.US)$An increase of nearly 6%,$Mondee Holdings (MOND.US)$Up nearly 16%,$Vroom (VRM.US)$ increased by 20%,$LI-CYCLE (LICY.US)$increased by 22.5%,$The Beauty Health (SKIN.US)$Up nearly 16%.

Last week, S3 Partners reported the 10 individual stocks with the highest borrowing interest rates. The net outstanding short interest (short interest) of these stocks exceeds $25 million. The list is as follows:$VinFast Auto (VFS.US)$,$Beyond Meat (BYND.US)$,$B. Riley Financial (RILY.US)$,$Freedom Holding (FRHC.US)$,$Cassava Sciences (SAVA.US)$,$Sirius XM (SIRI.US)$,$ImmunityBio (IBRX.US)$,$Global Partners (GLP.US)$,$Soleno Therapeutics (SLNO.US)$,$Hut 8 (HUT.US)$. Of these heavily shorted stocks, nearly half rose on Monday.

According to our understanding, loan interest rates are one of the many indicators that need to be observed when shorting stocks. Generally speaking, high borrowing rates mean high demand for short selling. Additionally, higher borrowing rates may indicate a shortage of capital. According to Ihor Dusaniwsky, general manager of S3 Partners, the rise in interest rates on stock loans may force (squeeze) some short sellers to close their positions and leave the market before others buy back to push up the share price in order to achieve profits.

Bears were hit hard last year due to the sharp rise in the US stock market. Overall, the bears lost close to $1950 billion in book losses at the end of 2023, offsetting about two-thirds of the nearly $300 billion in revenue they received during the 2022 market crash, according to S3 data.


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