Short Sellers Throttle GoPro Inc (GPRO)

With the stock sitting near annual-low territory, short sellers have swarmed GoPro Inc (NASDAQ:GPRO)

by Josh Selway

Published on Sep 25, 2015 at 3:11 PM
Updated on Jun 24, 2020 at 10:16 AM

Let's not pull any punches here: GoPro Inc (NASDAQ:GPRO) has been dreadful on the charts in recent weeks -- even more so than the broad market. In fact, since bumping up against $65 in mid-August, the shares have lost half their value, touching an annual low of $30.55 earlier this week. Looking at it from another angle, the stock has underperformed the S&P 500 Index (SPX) by 40 percentage points over the past 40 sessions. This downtrend is continuing today, with GPRO dropping 3.9% to $32.59. 

Using data courtesy of Schaeffer's Quantitative Analyst Rocky White, we can see how traders have responded to the equity's technical woes. During the most recent two-week reporting period, short interest on GPRO surged 49%. Among equities that trade at least a million shares per day, only seven saw a greater increase in short interest during that time.

What's more, on that list of 50 stocks with the biggest increases in short interest, GPRO fell the most between reports, declining 23.2% as traders upped the bearish ante. Furthermore, GPRO has the worst year-to-date return, down roughly 48%. As it stands now, short interest comprises almost one-third of GPRO's total float -- or 19.7 million shares -- marking an all-time high. 

It's interesting to point out that this pessimistic outlook hasn't spread to the options pits. Options activity has remained surprisingly normal, which in GPRO's case means call buying has greatly outweighed put buying. This is evidenced by the stock's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 1.92, which ranks in the middling 58th annual percentile. Of course, it could be the case that some bears are using calls to hedge their short positions

Also, like many options traders, the analyst community has stuck to its bullish position. Thirteen brokerage firms currently track GoPro Inc (NASDAQ:GPRO), nine of which still say it's at least a "buy," with four others calling it a "hold," and none deeming it a "sell." More startling than that, the stock's average 12-month price target of $70 represents more than double current levels. Given GPRO's recent technical track record, though, it wouldn't be surprising to see some analysts follow Cowen and Company's lead and cut their expectations

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