Short sellers not liking social media
01 March 2016 London
Image: Shutterstock
The collapse in share price among social media companies has taken short sellers by surprise, with demand to borrow falling by more than a third and short interest at a two-year low, according to Markit.
Although social media shares have dropped following a recent market sell-off, they’re not attracting the interest of short sellers.
The performance of these shares was tracked by the Global X Social Media Exchange-Traded Fund (ETF) (SOCL), which saw demand to borrow throughout 2015, and constituents moving into 2016 with below-average short interest.
According to Markit, this goes against trends seen in the rest of the market, which has seen short selling reach multi-year highs.
So far, 2016 has seen a 7 percent increase in demand to borrow social media shares, however, this still trails average shorting activity in the S&P 500, which has reached double-digits.
Markit data suggests that this lack of interest is fairly universal, with only seven SOCL constituents have more than 3 percent of shares out on loan.
Pandora is the most shorted with 8 percent of shares out on loan, and shares down by 24 percent, while Groupon has 7.4 percent of shares out on loan, despite being the highest conviction short at the beginning of the year. Markit attributes this to the disclosure of Alibaba’s stake in the company.
LinkedIn is highlighted as the only firm to see a significant rise in short interest since the start of the year. Its share prices have halved since a disappointing earnings update, but, although short interest has quadrupled, only 2.1 percent of shares are out on loan—fewer than at the start of 2015.
According to Markit, $32 million in funds has flowed out of the SOCL ETF in 2016 so far, more than a quarter of the total assets under management held.
The ETF saw a two-and-a-half-year low in February, and is down 13 percent year-to-date, more than double the dip seen by the rest of the market.
Although social media shares have dropped following a recent market sell-off, they’re not attracting the interest of short sellers.
The performance of these shares was tracked by the Global X Social Media Exchange-Traded Fund (ETF) (SOCL), which saw demand to borrow throughout 2015, and constituents moving into 2016 with below-average short interest.
According to Markit, this goes against trends seen in the rest of the market, which has seen short selling reach multi-year highs.
So far, 2016 has seen a 7 percent increase in demand to borrow social media shares, however, this still trails average shorting activity in the S&P 500, which has reached double-digits.
Markit data suggests that this lack of interest is fairly universal, with only seven SOCL constituents have more than 3 percent of shares out on loan.
Pandora is the most shorted with 8 percent of shares out on loan, and shares down by 24 percent, while Groupon has 7.4 percent of shares out on loan, despite being the highest conviction short at the beginning of the year. Markit attributes this to the disclosure of Alibaba’s stake in the company.
LinkedIn is highlighted as the only firm to see a significant rise in short interest since the start of the year. Its share prices have halved since a disappointing earnings update, but, although short interest has quadrupled, only 2.1 percent of shares are out on loan—fewer than at the start of 2015.
According to Markit, $32 million in funds has flowed out of the SOCL ETF in 2016 so far, more than a quarter of the total assets under management held.
The ETF saw a two-and-a-half-year low in February, and is down 13 percent year-to-date, more than double the dip seen by the rest of the market.
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