Breaking Down a Potential Shutterfly Stock Short Squeeze

SFLY stock has been making a beeline lower since its early June peak

Dec 28, 2018 at 11:31 AM
facebook X logo linkedin

It's been a rough six months for Shutterfly, Inc. (NASDAQ:SFLY), with the shares down 60.6% from their June 5 record peak of $100.34, last seen at $39.91. SFLY stock bottomed near familiar support at $35 during the Christmas Eve sell-off -- a region that's served as a floor since 2014 -- and the equity could be set to spike higher from here at the start of the new year.

shutterfly stock daily chart dec 28

As Schaeffer's Senior Quantitative Analyst Rocky White recently noted, short sellers often wait until the turn of the calendar year to cover their winning short trades, which allows them to delay paying taxes on profits until the next year and gives a short-term boost to the embattled stocks. Shutterfly popped up on a list of stocks that have rewarded short sellers handsomely this year, and could see a short squeeze in early 2019 as these bearish bets are covered.

Diving deeper, there are currently 4.85 million SFLY shares sold short, representing a healthy 14.6% of the stock's available float. It would take short sellers almost a week to cover these bearish bets, at the equity's average daily pace of trading.

Those wanting to bet on a short-term pop for Shutterfly may want to consider doing so with options. Not only are options cheaper to buy than the underlying stock, but SFLY, in particular, has tended to reward premium buyers in the last 12 months. This is based on the equity's Schaeffer's Volatility Scorecard (SVS) of 100 -- the highest reading -- which indicates the security has made outsized moves in the past year, relative to what the options market priced in.



How to collect 1 dividend check every day for LIFE

Did you know you could collect 1 dividend check every day the market is open? You could also do it starting with just $605! For me, I'm collecting 70 dividend checks every quarter…which averages around 1.1 dividend checks every business day. There's no trading behind this... no penny stocks or high-risk investments. All you do is buy and hold and you're set. There's no set up required either. If you start buying the dividend stocks I show you today... you could collect 1 dividend per day starting as early as this week. Click here for all the details.