Investing

Amazon Short Interest Soars to Almost 4 Million Shares

Earlier this month, Amazon.com Inc. (NASDAQ: AMZN) posted strong fourth-quarter results, with earnings per share more than doubling year over year and revenue at its cloud computing segment up 28%. Given that, and the fact that it has one of the largest market caps among U.S. public companies, one might wonder who would be willing to short Amazon’s stock.

The nearly 3.80 million Amazon shares short as of February 12, the most recent settlement date, were over 12.6% more than the previous figure, as well as the greatest number since last July. That was also up 4.3% from more than 3.63 million a year ago, and it represented about 0.9% of the total float. Note that the number of shares short has ranged between almost 5 million (last April) and around 2 million (August) in the past year. At the average daily volume at the end of the latest period, it would take about a day to cover all the short positions.

Last month, Amazon faced a unionization vote sanctioned by the National Labor Relations Board (NLRB) at the company’s fulfillment center in Bessemer, Alabama. Workers were seeking an election to determine if they should to be represented by the Retail, Wholesale, and Department Store Union. Voting began this week, and votes will be counted on March 29. Amazon has challenged the vote.

Also in January, Amazon announced its first-ever aircraft purchase as it expands its Amazon Air fleet. Currently, Amazon leases all the airplanes in its fleet and operates the planes under contracts with other providers. Some experts have estimated that Amazon’s fleet would rise to around 200 aircraft by the end of this year.

Barclays and Credit Suisse reiterated Buy ratings on the stock during the short interest period, while Goldman Sachs, JPMorgan and Oppenheimer boosted their price targets to $4,500, $4,400 and $4,100, respectively. That would be up to a 42% or so gain from the most recent close.

The Jefferies internet team recently recommended staying with mega-cap leaders for 2021, and Amazon was one of its top picks. The team had a $4,000 a share price target on the stock at the time, which would be more than 26% upside from the most recent close.

Shares ended the short interest period with more than a 2% gain, though they had been up over 6% earlier in the period. The stock climbed a little higher after the settlement date, but it has retreated lately. Note that the Nasdaq rose more than 8% between the most recent settlement dates.

Amazon stock was last seen trading at $3,159.53 a share. That is well up from the 52-week low of $1,626.03 from last March, but it is still short of the $3,552.25 52-week high seen back in September. The latest share price is down about 3% from the beginning of the year, while the Nasdaq has gained more than 5% in that time.