Staples, Inc. (SPLS) Gets Slammed By FTC

The FTC will try to block Staples, Inc.'s (NASDAQ:SPLS) merger with Office Depot Inc (NASDAQ:ODP)

by Josh Selway

Published on Dec 7, 2015 at 3:07 PM
Updated on Dec 7, 2015 at 3:08 PM

Staples, Inc. (NASDAQ:SPLS) is getting whacked today, after the Federal Trade Commission (FTC) said it would try to stop the company's planned merger with Office Depot Inc (NASDAQ:ODP), claiming the two retailers are essentially the only major office supply chains in the U.S. Now, SPLS is down 11.1% at $10.99, after earlier hitting a three-year low of $10.68, and earning a spot on the short-sale restricted list. 

SPLS has been trending lower for some time now. Due in part to pressure from their 60- and 80-day moving averages, the shares have trailed the broader S&P 500 Index (SPX) by more than 16 percentage points during the past three months. 

It's not surprising, then, to see that short interest is elevated on SPLS. It would take roughly a week for bears to buy back the 31.5 million shares that are sold short, going by average daily volumes. However, it appears some short sellers may wish they'd have stuck it out a bit longer. Specifically, short interest declined by 7.1% over the past two reporting periods. 

On the other hand, option traders may be hurting from today's decline. SPLS' Schaeffer's put/call open interest ratio (SOIR) stands at just 0.17, meaning call open interest outweighs put open interest by a factor of five, when looking at contracts that expire within the next three months. What's more, this reading is only 4 percentage points from an annual low, indicating short-term speculators are much more call-skewed than normal. 

Looking elsewhere, analysts are perfectly split on Staples, Inc. (NASDAQ:SPLS). Six covering brokerage firms say the shares are a "strong buy," while the other six deem them just a "hold." On that note, just moments ago, BB&T downgraded its opinion of the stock to "hold" from "buy."

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