GoPros Inc.’s (GPRO US) stock price and short interest have fallen and risen in lockstep this year with their high’s in the beginning of January, low’s (down 51% and 62% respectively) in mid-May, and rebound (up 97% and 158% respectively) in September.
On September 19th GoPro announced its new “Hero5” cameras, “Karma” drone and cloud upload service and its stock price responded with a more than a 10% increase. GoPro’s stock is now nearing overbought status after consolidating and spiking off its 200 day moving average and nearly doubling since mid-May. GoPro’s competition has not been idle, Snapchat introduced a wearable sunglass camera called “Spectacles” and both Samsung and LG launched their own virtual reality cameras. If, as analysts expect, GoPro can reverse its dismal 2015 second half sales effort, neither its recent torrid price run-up nor its competition will slow down its stock price.
GoPro short interest is at $579 million, its year to date high, but will not climb too much further as there is very little stock left to borrow. New stock borrows are going at 80% – 100% fee and existing borrows are at 30% fee and rising after being just 10% fee in August. The S3 Crowding Indicator, a measure of the magnitude of real-time shorting activity relative to float, has shown clusters of crowding since 9/6 and a large spike on 9/20. Further clusters will indicate even higher stock borrow costs and the strong chance of an imminent short squeeze.
If GoPro’s October earnings release is positive, and its stock rises before and after the announcement, the resulting short squeeze will turbocharge returns and push GoPro’s stock price towards the $20 price level.
For more information on the above analysis, please contact:
Ihor Dusaniwsky, Head of Research, S3 Partners, LLC Ihor.Dusaniwsky@S3Partners.net
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