Amazon.com Inc. (AMZN) is in the process of acquiring wholesale pharmacy licenses in 12 states according to the St. Louis Dispatch. Although these licenses would not allow them to compete directly with CVS Corp (CVS), Walgreens Boots Alliance (WBA) and Rite Aid Corp (RAD) it may be the first step in getting retail license that would put Amazon.com in direct competition with the brick and mortar pharmacy retailers.
Short interest in the U.S. Drug Retail Sector declined by $1.1 billion over the last month, short interest is down to $3.6 billion today.
| Drug Retail Sector
(in $ millions) |
Ticker | Short
Interest |
1 Month
Change S.I. |
YTD MTM
P/L |
10-26
MTM P/L |
| CVS Corp | CVS | $1,717 | -$354 | +$185.6 | +$50.5 |
| Walgreens Boots Alliance | WBA | $1,407 | -$775 | +$393.3 | +$45.6 |
| Rite Aid Corp | RAD | $348 | -$4 | +$350.3 | +$21.5 |
| Diplomat Pharmacy Inc. | DPLO | $137 | -$15 | -$54.8 | +$3.1 |
All four Drug Retail stocks were trading relatively flat until the Amazon.com announcement came out around 2:30, and their stock prices quickly fell on average 3.6%. Short sellers made over $100 million in mark-to-market profits in the hour and a half before the close. Drug Retail shorts are now up $874 million in mark-to-market profits for the year.
With Amazon.com entering the retail pharmacy business, we can expect short selling to reverse course and increase in the near future and get closer to the $5 billion levels seen in late summer.
Want deeper insight into the above analysis?
Contact: Ihor.Dusaniwsky@S3Partners.net
Managing Director Predictive Analytics, S3 Partners, LLC
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