Top Stock Picks for Summer 2021: Sonos (SONO)

Short sellers have increased their positions on SONO by 55% this year

Managing Editor
May 21, 2021 at 9:34 AM
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We don't buy the "sell in May and go away" song and dance and we are here for spotting opportunities that others don't see, so stay tuned as we highlight Bernie Schaeffer and his trading team's top stock picks to buy in May and hold through the summer months! To access the entirety of Schaeffer's Top Summer 2021 Stock Picks report, click here.

Speaker company Sonos Inc. (NASDAQ: SONO) reported earnings on May 5 and has scored a post-earnings bull gap after its last two corporate reports. Around this time last year, Sonos was the subject of merger & acquisition rumors. Sitting just under the $5 billion market cap, if a larger player such as Apple (AAPL) comes calling for a partnership or purchase, this level could create a floor and keep pullbacks at bay.

In the last month, SONO pulled back to its 50-day moving average and the round $40 level. This is the second pullback to this area in as many months, while the $44 level above coincides with the stock's 12-month consensus price target. Meanwhile, $45 is three times SONO's initial public offering (IPO) price. Another trip into this area could make SONO ripe for a breakout, as sellers at these levels are potentially fewer.

Sonos Inc (NASDAQ:SONO) Top Stock Pick for Summer 2021

Speaking of short sellers, SONO is up 82% year-to-date, while shorts have increased their positions by 55%. Not only does this underscore the stock's technical tenacity, but a healthy 8% of SONO's total available float is sold short. With many of these shorts underwater, they are more prone to covering and at the very least, will become less aggressive.

Keep an eye out for a shift in analyst sentiment as well. Of the seven brokerages covering SONO, three maintain a tepid "hold" rating. A round of upgrades could keep the wind at the equity's back. 


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