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Short Seller: This Stock Could Fall 90%

Loxo Oncology stock sits atop the Nasdaq after upbeat cancer drug data

Managing Editor
May 17, 2018 at 3:00 PM
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Stocks are slumping today, despite another early burst from oil prices and the energy sector. Among stocks making particular noise today, World Wrestling Entertainment, Inc. (NYSE:WWE) and biotech stock Loxo Oncology Inc (NASDAQ:LOXO) are pushing higher, while construction name US Concrete Inc (NASDAQ:USCR) is swimming in red ink. Here's a closer look at what has shares of WWE, LOXO, and USCR moving today.

Surging WWE Stock Ripe For A Short Squeeze

It seems wrestling is popular on television again. World Wrestling stock is up 14.3% to trade at $49.86 -- one of the top stocks on the New York Stock Exchange (NYSE) today -- amid reports that TV networks are lining up to make a deal for WWE's "Smackdown" franchise. Further, after allegedly declining to re-up its current "Smackdown" deal, NBCUniversal has expressed interest in renewing WWE's separate "Raw" franchise at three times its current value.

WWE stock earlier today touched an all-time high of $51.33, and is on track for its best day since early 2015. A short squeeze could provide more tailwinds for the surging equity. Short interest fell by 15% in the most recent reporting period, yet the 5.12 million shares sold short represent nearly 14% of WWE's total available float and almost seven days of pent-up buying power. 

Upbeat Drug Data Sends LOXO Stock to Top of Nasdaq

Loxo Oncology stock is up 19.5% to trade at $166.72 -- one of the best stocks on the Nasdaq today -- after the firm reported upbeat preliminary study data for its cancer drug. In response, Stifel issued a price-target hike to $190 from $140.

LOXO stock tagged a record high of $171.98 earlier, and is on track to post its best single-day performance since June 2017. Further, the equity has now more than tripled in value in the last year.

Despite the stock's upward climb, short interest represents nearly 15% of LOXO's total available float. At the security's average daily trading volume, it would take more than 11 days for shorts to buy back their shares.

Short Seller Report Buries U.S. Concrete

U.S. Concrete stock is down 6.9% to trade at $56.95, after notorious short seller Spruce Point Capital issued a "strong sell" report, noting it expects up to 90% downside for USCR stock. The report also said the company is "becoming more dependent on shady acquisitions," and waxed pessimistic on the the firm's "rapid CFO turnover."

USCR shares have now shed 31.5% in 2018, with recent rebound attempts rejected by their 50-day moving average. The stock is now pacing for its lowest close since May 1 -- when it touched an annual low of $53.30 after earnings.

Options traders seem to have taken the bearish cue, although volume tends to be light on an absolute basis. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows the security's 10-day put/call volume ratio at 2.24, ranking in the 91st percentile of its annual range. This suggests that puts have been bought to open over calls at a faster-than-usual clip during the past two weeks.

Shifting gears to today, put volume has exploded. Over 5,300 puts have changed hands today -- 14 times the intraday volume and already an annual high. The most popular are the June 55 and May 60 puts.

 

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