Short interest in Teladoc (TDOC US), the healthcare service that allows patients to see a physician virtually, has been continuing its ascent higher since touching it’s 2016 low of $35mill back in mid-May. With current short interest estimated to be over $150mill now, borrow rates have been rising rapidly, closing in on 40% fee today.
Even after the share price plunged 15% earlier this month after the company forecasted a 2016 guidance below estimates, we witnessed very little in the way of short sellers covering/buying back their positions to take quick profits. In fact, we have experienced quite the opposite, with shorts maintaining positions and looking to build bearish bets even further. According to the S3 Velocity Monitor, a measure of the real-time relative change in shorting activity, the slope of all three trend lines (7, 30, and 90 day) have spiked significantly upwards since July.
With borrow utilization near max capacity, lenders are catching up to where the spot market is trading and re-rating existing shorts. In turn, this will only pressure rates further in the medium term, until we start to see shorts trim positions, which is not what the doctor is prescribing at the moment.
For more information on the above analysis, please contact:
Matthew Unterman, Director, S3 Partners, LLC Matthew.Unterman@s3partners.net
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