Every two weeks, the short interest data on all publicly traded stocks is released to the public. Short sellers bet that stocks will drop, and they borrow shares in the public corporation they are shorting, hoping to replace those shares at a less expensive price in the future. The action can be risky. A rising stock price means the shares have to be replaced at a much higher price.
The most recent period for which short interest was released covers the two weeks that ended April 15. Several companies had more than 15% of their total shares shorted or borrowed anticipating a price drop. This figure is extremely high compared to most stocks.
Bed Bath & Beyond Inc. (NYSE: BBBY) has a short position that is 21.7% of its shares outstanding. The retailer has been rocked by poor sales, brought on largely by the pandemic. It is also in a highly competitive part of the retail market, which is the sale of household goods like bedding, towels and cookware.
Bed Bath & Beyond announced in September 2020 that it would close 63 stores. It announced in January that it would close more than 40 this year.
Bed Bath & Beyond’s shares spiked in January on good news about sales. The stock has cooled off since then and is currently up 43% for 2021. Short sellers are gambling it cannot hold those gains.
Beyond Meat Inc. (NASDAQ: BYND) has 20.5% of its shares sold short. The company sells plant-based products that taste like chicken, beef and pork.
In the most recently reported quarter, Beyond Meat’s numbers missed Wall Street expectations badly. After a surge in its share price in January, the stock has sold off and recently dropped below the performance of the S&P 500 for the year to date.
Whether short sellers will make money in these two stocks most likely will be determined over the next two weeks, if that has not been determined already.