Shares of payment processing firm, Square Inc. (SQ), hit an intra-day all-time high Thursday of $34.75. After this year’s massive Square Inc. stock rally (up 150.25% YTD), short sellers continue to hold on to their record bearish bets. S3 Partners real-time analytics calculates 32.2 million shares currently short with $1.1 billion dollars at risk. This is an increase of 178% on the shares and 595% of dollars at risk, since the beginning of 2017.
Despite the elevated levels of Short Interest, only 13.4% of the float is being utilized. Should short sellers be inclined to increase their negative bets, stock is readily available to borrow. Shares of Square trade at general collateral levels, the cheapest fee or easiest to borrow stock. The incredible rise in the stock price has not been kind to short sellers this year. S3 Partners calculates that bearish investors have lost $346 million, in mark to market losses.
Investors have plenty of reasons to be bullish on the future of Square. They operate in the payments and processing space, an industry with a tremendous amount of growth ahead. Square offers niche products geared toward small and medium sized businesses. They provide credit card processing and have even entered the small business loan market. The loan business has been a growth driver for them, because Square is able to offer customers low rates with minimal risk assumed by them. The market is viewing Square as a full-blown Fintech stock.
| Data Proc. &
Outsourced Services (In $ millions) |
Ticker | Short
Interest 10/26/17 $ |
YTD Change
In Short Interest $ |
YTD
MTM P/L $ |
YTD Stock
Performance % |
| Square | SQ | $1,100.0 | +$940.9 | -$346.3 | +150.3% |
| PayPal | PYPL | $1,647.2 | +$428.8 | -$886.2 | +80.7% |
| Visa | V | $3,333.5 | +$163.4 | -$1,313.9 | +40.7% |
| Mastercard | MA | $1,133.1 | +$463.5 | -$350.1 | +42.0% |
Being short any of Square’s peers, in the Data Processing and Outsourced Services sector, has inflicted similar damages on bearish investors. With Square yet to turn a profit, earnings approaching and the stock sitting at an all-time high, any slight missteps could be a windfall for shorts.
Want deeper insight into the above analysis?
Contact: Brett.Weiss@S3Partners.net
Director, S3 Partners
For more information on S3’s reporting, data and analytics solutions, email us at sales@s3partners.net
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The information herein (some of which has been obtained from third party sources without verification) is believed by S3 Partners, LLC (“S3 Partners”) to be reliable and accurate. Neither S3 Partners nor any of its affiliates makes any representation as to the accuracy or completeness of the information herein or accepts liability arising from its use. Prior to making any decisions based on the information herein, you should determine, without reliance upon S3 Partners, the economic risks and merits, as well as the legal, tax, accounting and investment consequences, of such decisions.
