Stitch Fix stock is soaring Tuesday morning—and it looks like a classic short squeeze.
Too many short sellers lead to a feedback loop of more buying to cover those bets if something goes right. And that’s what happened with Stitch Fix, which has surged more than 30% in premarket trading after turning a surprise profit.
More than 37% of Stitch Fix shares available to trade are sold short—the average for a stock in the S&P 500 is closer to 2%—an amount that would take about three weeks to cover.
Whether the squeeze proves more lasting could depend on whether the current quarter is a blip or the beginning of a long-term trend. That would take increasing Wall Street bullishness and solid business execution.
That has been the case with another popular short— Tesla. The EV auto maker has blown away expectations for four straight quarters and analysts are coming around to the stock too. Just 6% of the float is sold short, down from 25% at its peak.
Tesla announced Tuesday it plans to sell $5 billion in stock, a move that is likely intended to smooth the company’s transition into the S&P 500.
Legendary short seller Jim Chanos of Kynikos Associates is still short Tesla stock and expects the speculative fervor that has driven its shares up 855% to subside. It might, but that can take time.
Short sellers beware.
—Al Root
*** Join Barron’s Beverly Goodman and a special guest today at 12 p.m. ET for a discussion on how to manage your personal finances, investments and taxes. Register here.
***
Britain Begins First Mass Covid-19 Vaccination Program
Margaret Keenan, a 90-year-old grandmother from Coventry, England, became on Tuesday the first patient in the Western Hemisphere to receive a coronavirus vaccine shot outside of a clinical trial, as part of the U.K. government’s plan to vaccinate the British population within the next few months.
- The vaccine is being developed by German biotech company BioNTech and U.S. pharmaceuticals group Pfizer, and received a fast-track approval by the country’s medicines regulator last week.
- The plan is to arrange the vaccination campaign by order of priority, starting with pensioners in care homes and the elderly, followed by health workers, then the rest of population by age group, from old to young.
- U.K. Health Secretary Matt Hancock said in an interview that he hoped “that from the spring things can start getting back to normal,” and that he had “great hopes for the summer 2021.”
- Britain has been the European country worst-hit by the virus, with over 61,000 deaths according to the Office for National Statistics estimate.
- Setbacks in production of both the BioNTech/Pfizer shot and another one, yet to be approved, from Oxford University and AstraZeneca, mean that the U.K. will have less doses in the next weeks than originally thought.
- Buckingham Palace declined to comment on rumors that Queen Elizabeth II, 94, and her husband Prince Philip, 99, would take the jab to demonstrate the vaccine’s safety.
What’s Next: As Brexit becomes effective on Jan. 1, the U.K. is set to import in the next few months millions of doses of vaccines fabricated in Belgium in the case of Pfizer, or the Netherlands and Germany, for the AstraZeneca shot. Once vaccines are approved, the key problem for European health authorities will be the logistics of their distribution.
—Pierre Briançon
***
U.S. Health Officials Push for Quick Vaccine Rollout
As the Covid-19 pandemic continues to worsen heading into the depths of winter, the Trump administration is planning for a rapid rollout of the first round of vaccinations, with as many as 24 million Americans immunized by mid-January.
- President Donald Trump is expected to sign an executive order Tuesday that would ensure Americans receive priority access to any vaccine procured by the U.S. government before people from other countries.
- Pfizer’s vaccine could be approved by the end of the week, with shots starting immediately thereafter for nursing home residents and health care workers. The Food and Drug Administration is expected to release analyses of the vaccine Tuesday that show how it works with different demographic groups, The Wall Street Journal reports.
- Polling shows that a large number of people are hesitant to get vaccinated. Nearly four in 10 Americans said they were unwilling to get vaccinated, according to a Gallup poll conducted from Oct. 19 to Nov. 1.
- On Monday, Dr. Anthony Fauci said that the effect of the Thanksgiving surge won’t be known for another week, followed by a potential subsequent surge a few weeks after Christmas and Hanukkah. “Without substantial mitigation, the middle of January can be a really dark time for us.”
- The number of Americans hospitalized with Covid-19 hit a fresh record Monday, passing 102,000 according to data compiled by the Covid Tracking Project.
What’s Next: Dr. Fauci estimated that Americans with no special risk factors likely won’t start getting vaccinated until April and that it will take until “the core of the summer” of 2021 for most people in the U.S. to have received the two-dose vaccinations and be “optimally protected.”
—Ben Walsh
***
Airbnb and DoorDash IPOs Will Use “Hybrid Auction” Process
The hot Airbnb and DoorDash initial public offerings due this week will use a hybrid auction mechanism meant to price shares closer to where they actually trade the first day.
- With the hybrid auction, institutional investors submit through an electronic portal the quantity of stock they are willing to buy and the prices that they are prepared to pay. Underwriters and the companies will set an IPO price.
- Only investors who bid at, or above, the set price will be allocated stock, and the companies determine which investors ultimately get stock. Under the traditional IPO underwriting mechanism, investors indicate price and quantity within the range and below it, but not above the range.
- The hybrid auction is intended to address growing criticism from Silicon Valley and elsewhere that companies get shortchanged in the IPO process. The same process was used in September as part of the IPO of Unity Software, a maker of tools for videogame development.
What’s Next: By forcing investors to specify what price they are willing to pay, the companies should get a better idea of demand and be able to set an IPO price that is more fair and potentially leaves less money on the table for the lucky institutional investors that get allocated stock.
—Andrew Bary
***
Grocers, Retailers Accuse Poultry Producers of Price-Fixing
Target and Chick-fil-A joined a group of companies suing major poultry producers over allegations of price-fixing.
- Both companies claim in suits that poultry producers intentionally cut production to raise prices and coordinate prices, The Wall Street Journal reported.
- Representatives from Fieldale Farms, Perdue, and Tyson Foods denied the allegations, while representatives at Claxton and Sanderson Farms declined to comment, according to the Journal. Pilgrim’s Pride didn’t respond to the Journal’s request for comment.
- The companies are seeking damages and to recoup court fees. This year, the Justice Department has indicted several individuals in the poultry industry on antitrust charges, alleging a, “long-running scheme affecting competition through the rigging of bids and price fixing of broiler chicken products.”
What’s Next: Other companies that have filed lawsuits against poultry firms include Aldi, Golden Corral, Campbell Soup, Walmart, Kroger, Sysco, US Foods Holding, and Albertsons.
—Connor Smith
***
Georgia Recertifies Biden Win After Third Recount
Georgia’s Republican Secretary of State, Brad Raffensperger, recertified the state’s election results Monday after a third recount showed President-elect Joe Biden defeating President Donald Trump.
- “We’ve never found systemic fraud—not enough to overturn the election,” Raffensperger said at a news conference at the state’s Capitol. Biden won the state by more than 12,000 votes.
- On Monday, a federal judge dismissed a lawsuit by former Trump campaign lawyer Sidney Powell seeking to overturn the election results in Georgia, calling the effort “perhaps the most extraordinary relief ever sought in any federal court in connection with an election.”
- Two key runoffs are set to be held on Jan. 5 for Senate seats. Republican Sen. Kelly Loeffler debated her opponent Raphael Warnock on Sunday, while Democratic candidate Jon Ossoff appeared alone after his Republican runoff opponent in the state, Sen. David Perdue, declined to participate.
- Biden continues to move forward in building out his cabinet nominees, reportedly choosing Lloyd Austin as Defense Secretary. The retired Army general previously headed military operations in the Middle East under President Barack Obama.
What’s Next: The results of the Georgia runoff elections will decide which party controls the Senate. If both Democratic candidates win, the Senate will be evenly split with Vice President-elect Kamala Harris breaking tie votes. If either Republican incumbent prevails, Republicans will continue to control the chamber.
—Ben Walsh
***
Congrats to the winners of the November virtual stock exchange game. Be sure to join this month’s Barron’s Daily virtual stock exchange challenge and show us your stuff.
Each month, we’ll start a new challenge and invite newsletter readers—you!—to build a portfolio using virtual money and compete against the Barron’s and MarketWatch community.
Everyone will start with the same amount and can trade as often or as little as they choose. We’ll track the leaders and, at the end of the challenge, the winner whose portfolio has the most value will be announced in The Barron’s Daily newsletter.
Are you ready to compete? Join the challenge and pick your stocks here.
***
—Newsletter edited by Anita Hamilton, Mary Romano, Stacy Ozol, Matt Bemer, Ben Levisohn
"selling" - Google News
December 08, 2020 at 08:04PM
https://ift.tt/3owLbEO
Stitch Fix, Tesla, and the Perils of Short Selling - Barron's
"selling" - Google News
https://ift.tt/2QuLHow
https://ift.tt/2VYfp89
Bagikan Berita Ini
0 Response to "Stitch Fix, Tesla, and the Perils of Short Selling - Barron's"
Post a Comment