S3 Partners: These stocks are investors’ biggest short targets right now

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• Silvergate hit hard by FTX debacle
• Bed Bath & Beyond narrowly averted bankruptcy
• More companies in trouble

As TipRanks reports, data analytics firm S3 Partners recently published a list of some of the top short targets. The following stocks made up the top 5.

Silvergate Capital stock

Topping the list was crypto-friendly US bank Silvergate Capital, which was hit by the crypto debacle surrounding the bankruptcy of FTX, formerly the world’s second-largest crypto exchange. Silvergate came under pressure to justify the bank’s role as custodian in the transactions due to the shift of FTX customer deposits to Alameda Research. Meanwhile, Silvergate is facing a class action lawsuit over its relationship with FTX. This is about the bank accounts of FTX and its sister company Alameda Research, which were run by Silvergate and through which customer funds were allegedly embezzled.

Recently, Silvergate warned that the continuation of the business was questionable and informed the US Securities and Exchange Commission that it could not present its annual report for 2022 on March 16 as planned because the capital position had continued to deteriorate.

This news also weighed on the price of Silvergate stock, which is down over 83 percent on the NYSE this year alone and is currently trading at just $2.85 (as of the closing price on March 9, 2023). According to data from analyst firm S3 Partners, hedge funds had recently staked 82 percent of all Silvergate shares in bets on a price decline. No other US company had such a high rate.

Bed Bath & Beyond Stock

The second largest short target for S3 Partners was US retailer Bed Bath & Beyond. The company has been under pressure since the summer of last year: After investor Ryan Cohan triggered a real run on the ailing Bed Bath & Beyond share in spring 2022, he sold millions of shares through his investment company RC Ventures in the summer. A little later, the company announced a significant savings program – including the closure of numerous branches and the reduction of the workforce – and a capital increase. At the beginning of the year there was talk of a possible insolvency, which the company was able to avert for the time being with a share sale. As reported by the German Press Agency, the company only has a few quarters to revive business, according to analysts. Suppliers are also concerned that the company has delayed or stopped payments altogether, two suppliers told Reuters.

Bed Bath & Beyond stock is now a long way off its current 52-week high of $30.06. This year alone, the stock on the NASDAQ has fallen by around 51 percent. Most recently, a Bed Bath & Beyond share cost 1.23 US dollars (as of the closing price on March 9, 2023).

Carvana share

Bed Bath & Beyond is followed by the US used car platform Carvana in third place. The company has posted net losses in every quarter since its IPO in 2017, it-times reports. In the fourth quarter of 2022, Carvana sold 86,977 vehicles, which corresponds to a decrease of 23 percent compared to the same period last year. Sales fell accordingly by 24 percent to 2.84 billion US dollars. Net loss was $806 million, up 9 times the $89 million in the same quarter last year. The troubled used-car dealer is struggling to sell vehicles it previously bought at high prices as semiconductor shortages limited new-vehicle supply, Reuters reports.

“Nothing worth doing comes easy. Building Carvana was no different. 2022 reminded us again. It has undoubtedly been a challenging time, but like the challenges we have faced before, “We are up to the task. Over the next 6 months, we will work to achieve an estimated annual cost reduction of $1 billion, and we will do so while not only maintaining, but improving, our customer experiences,” said Ernie Garcia, Carvana founder and CEO, quoted in the press release accompanying the figures.

The drop in demand has left its mark on Carvana shares: within a year, the share has lost around 92.57 percent in value and is trading at a price of $8.44 on the NYSE (as of the closing price on March 9). March 2023) is a long way off its current 52-week high of $150.84 set in spring 2022.

WeWork stock

Also among the top short-seller targets is the US company WeWork, which offers office space and co-working spaces for the self-employed and companies and ranks fourth in S3 Partners’ list. The company forecast lower-than-expected earnings for the current quarter when it released its latest financial statements, signaling that the company was feeling the effects of mass layoffs in the tech sector, according to Reuters. The company’s net loss for the current quarter was $454 million. According to Seeking Alpha, the company, which announced it will cut 300 jobs as part of broader plans to downsize underperforming sites, is struggling to survive.

WeWork stock has lost about three quarters of its value on the NYSE over the past year and is currently trading at $1.09 (as of the closing price on March 9, 2023). Since the beginning of the year alone, the paper has fallen by around 23.7 percent. According to Seeking Alpha, short interest in WeWork was nearly 38 percent at the end of February. The bears are betting that the current cash burn issues plaguing WeWork will lead to further weakness, the financial news outlet reported.

Upstart Holdings stock

According to TipRanks, S3 Partners’ fifth biggest short target is Upstart Holdings. The company bills itself as a leading artificial intelligence lending marketplace. In the fourth quarter of 2022, Upstart Holdings suffered a 52 percent drop in revenue to $147 million. During that period, lending partners originated 154,478 loans totaling $1.5 billion, down 62 percent from the prior-year quarter. The conversion rate fell from 24 percent in the same period last year to 11 percent in the fourth quarter of 2022. The company was able to reduce the net loss somewhat. This amounted to 55.3 million US dollars in the past quarter. For comparison, it was $58.9 million in the fourth quarter of 2021. For the current first quarter of 2023, Upstart Holdings forecast revenue of approximately $100 million and net loss of approximately $145 million.

In the last twelve months, Upstart Holdings shares on the NASDAQ have fallen by around 85 percent to $16.22 last time – and that despite a recovery since the beginning of the year, during which the stock was able to gain around 35 percent again (as of January 2017). : closing price on March 9, 2023).

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