3 Social Media Stocks See Big Swings In Short Interest
Among the leading social media companies based in the United States, LinkedIn (NYSE: LNKD), Twitter (NYSE: TWTR) and Zynga (NASDAQ: ZNGA) experienced the largest swings short interest in early August.
Short sellers shied away from Angie's List, eBay, Facebook, Google and Shutterfly between the July 31 and August 15 settlement dates, but short interest in Yelp grew somewhat. The number of shares short in Groupon, MeetMe and Pandora Media was essentially the same as in the previous period.
In addition, note that the number of U.S.-listed shares (or ADSs) sold short of Chinese social media companies YouKu Todou and YY increased in the first weeks of the month, but short interest in Baidu, Renren, Sina, Sohu.com and Weibo declined.
Below we take a quick look at how LinkedIn, Twitter and Zynga have fared and what analysts expect from them.
See also: LinkedIn Has Been Flying Under The Radar
Short interest in this online professional network operator swelled about 18 percent to more than 6.38 million shares in the first two weeks of the month. That was the greatest number of shares short in the past year, and it represented around six percent of the float. Days to cover is about two.
This Mountain View, California-based company reached a settlement in August with the U.S. Department of Justice over unpaid wages. It has a market capitalization of more than $27 billion, and its long-term earnings per share (EPS) growth forecast is more than 37 percent.
Of the 37 analysts surveyed by Thomson/First Call, 25 recommend buying shares, while the rest recommend holding them. The mean price target, or where analysts expect the share price to go, is less than four percent higher than current share price, and it is also less than the 52-week high.
The share price rose more than 21 percent during the two-week period and has risen a bit more since. It is well above the 50-day and 200-day moving averages. Over the past six months, the stock has underperformed Facebook and the broader markets, though it outperformed Google.
Short interest in this micro-blogging service provider shrank about 31 percent. The 21.60 million shares short in the middle of August represents about seven percent of the float, the smallest number of shares short so far this year. At the current average volume, all of the short positions could be closed out in a day.
It was widely reported during the period that some 23 million active Twitter users were in fact robots. The San Francisco-based company has a market cap of more than $29 billion. So far it is expected to post a dime per share profit for this year. But its return on equity and operating margin both remain in negative territory.
Of the 35 analysts surveyed, 15 recommend buying Twitter shares, though that is more buy recommendations than a month ago. The analysts' mean price target is about eight percent higher than the current share price, but that is well less than the 52-week high reached last December.
Twitter's share price is more than 20 percent higher than a month ago, yet it is still down more than 31 percent year-to-date. Over the past six months, the stock has underperformed competitors Facebook and LinkedIn, as well as the Nasdaq and the S&P 500.
Zynga
Short interest in the online social games operator jumped about 19 percent to more than 53.75 million shares during the period, or more than seven percent of the float. That ended a six-period streak of declining short interest. It would take about two days to close out all of the short positions.
Zynga's second-quarter net loss widened and it trimmed its guidance due to game delays. The San Francisco-based company has a market cap of less than $3 billion. Its long-term EPS growth forecast is about 30 percent, but here too the return on equity and operating margin are in the red.
For at least three months, the analysts' consensus recommendation has been to hold shares of Zynga. The stock has more Underperform ratings than buy recommendations. Yet, a move to the mean price target would be a gain of almost 18 percent for the shares. The consensus target is less than the 52-week high, though.
The share price ended the period about where it began it, but it has risen more than three percent since. It remains well below the 50-day and 200-day moving averages. Over the past six months, the stock has underperformed not only the likes of Electronic Arts and Facebook, but the broader markets as well.
See also: Pandora: Music To The Ears Or A Box Full Of Trouble?
At the time of this writing, the author had no position in the mentioned equities.
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