One of the latest retailers to step in to the earnings confessional was Sears Holdings Corp (NASDAQ:SHLD). The much-maligned retail giant said it swung to a first-quarter loss, and reported sinking revenue that fell short of expectations. The firm also announced plans to shutter 72 more underperforming stores. In response, SHLD stock is down 11.2% to trade at $2.85 this morning -- one of the worst stocks on the Nasdaq in early trading.
News of a tire partnership with Amazon (AMZN) earlier this month helped Sears shares touch a year-to-date high above $4 and consolidate above the $3 level. Prior to today's results, Sears stock had gained 20% this quarter, guided higher by its 30-day moving average since falling to a record low of $1.99 on Feb. 12. Now, SHLD is on track for its worst week since late January, and has fallen back below the $3 mark.
Although the stock has found itself on the short-sale restricted (SSR) list today, plenty of short sellers are likely cheering the drop. Short interest increased by 10% in the most recent reporting period, to 14.24 million shares, the most since June. This represents a whopping 51% of SHLD's total available float, and more than four times the average trading pace.
It's no surprise that options traders are equally as bearish, despite limited downside profit potential on a penny stock. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows SHLD with a 10-day put/call volume ratio of 1.38, which ranks in the 73rd percentile of its annual range.