Pinterest Inc (PINS) short sellers did not have a 2nd quarter 4% increase in revenues and an increase of 49 million 2nd quarter users on their vision boards, nor the resulting +36% daily increase in PINS stock price. PINS shorts more than doubled their year-to-date mark-to-market losses on today’s price move and we should expect a short squeeze in the stock as short sellers look for more attractive short targets elsewhere.
PINS short interest is $674 million; 26.74 million shares shorted; 6.88% of its float. PINS is the 9th largest short in thee Interactive media & Services sector.
Short sellers have been yo-yoing all year long with short selling followed by short covering several times throughout 2020. Short sellers finally topped the 22 million share level in late June even as PINS’s stock price rallied along with many of the stay-at-home stocks. Shorts were again looking at what they thought was an overbought stock due for a reversal. Short selling fervor in PINS petered out in July and short interest stalled between the $650 million to $750 million range, with shorts losing some of their conviction recently.
Short sellers have been trimming their short exposure in PINS recently with 2.56 million shares, worth $64 million, covered over the last month with more than half of those buy-to-covers, 1.41 million shares, occurring last week. With ads being pulled from Facebook Inc (FB) shorts may have realized that PINS might be the benefactor of new ad revenues hitting their bottom line and new eyeballs hitting their website. Today’s price move will certainly accelerate recent short covering as mark-to-market losses force a short squeeze.
PINS shorts are now down -$375 million in year-to-date mark-to-market losses, down -$207 million in mark-to-market losses today. Today’s large and sudden loss will stun shorts with less conviction in to trimming or closing out their short positions. The deeper shade of red on their P\L reports will create a short squeeze that will nudge PINS stock price even higher. Seeing shares shorted back down to the 22-23 million share level would see a shakeout of half of the recent short selling in the name. If PINS continues to rally, short covering could drop shares shorted down to its recent low of 16 million shares.
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