Another of Wednesday’s big losers was Warner Bros. Discovery Inc. (NASDAQ: WBD). The company’s stock dropped 5.83% following an announcement that its near-legendary HBO brand is being dropped from its HBO Max streaming service, and the streamer will now be called simply Max. They paid CEO David Zaslav more than $246 million last year to toss away a brand that’s been around for 50 years because Zaslav, who took over as CEO after a merger with the Discovery network, wants to boost viewers and subscribers to Discovery’s reality shows? Do subscribers pay to watch “Succession” or “Beat Bobby Flay?” Which one is associated with HBO? Who even knows that the Food Channel is partly owned by Discovery? Who even cares?
Ihor Dusaniwsky and Matthew Unterman of S3 Analytics have released their first-quarter wrap-up of short sellers’ profits and losses. Losses mounted in the quarter, with short sellers losing $62.6 billion on average short interest of $940 billion. Added to a $43.5 billion loss in the fourth quarter of 2022, the six-month total of $106.1 billion represents the loss of about 30% of short sellers’ profits in the first three quarters of 2022. According to the S3 analysts, “64% of every dollar shorted in the first quarter was an unprofitable trade.”
The most profitable shorts during the quarter were SVB Financial Group, First Republic Bank (NYSE: FRC) and Signature Bank (NYSE: SBNY). SVB shorts made a profit of $1.06 billion, for a gain of 121% based on average short interest in the stock. First Republic shorts pocketed $704.5 million, a gain of 151%, and Signature Bank short sellers gained $643 million, or 154%.
The least profitable short trades were Tesla Inc. (NASDAQ: TSLA), Nvidia Corp. (NASDAQ: NVDA) and Apple Inc. (NASDAQ: AAPL). Recall that tech stocks bounced sharply higher in the first quarter. Tesla shorts lost $7.7 billion, more than half the average short interest in the stock, Nvidia shorts lost $5 billion, about 62% of the short bets, and Apple shorts dropped $4 billion, about 24% of average short interest in the iPhone maker.
In a separate press release, S3 names its most squeezable U.S. stocks. A short squeeze happens when short sellers are forced to cover their bets that the stock will fall because the stock price is going up. When the shorts cover, the price goes even higher.
S3’s squeeze score is a blend of short sellers’ higher financing costs, rising unrealized losses and higher short-side volatility. The firm has identified 18 stocks with squeeze scores of 100. The top five are Coinbase Global Inc. (NASDAQ: COIN), CarMax Inc. (NYSE: KMX), GameStop Corp. (NYSE: GME), MicroStrategy Inc. (NASDAQ: MSTR) and AMC Entertainment Holdings Inc. (NYSE: AMC).
Originally published at 24/7 Wall St.
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