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Jun 14, 2017

S3 Research: Short Sellers Filling up on Starbucks

Shares of Starbucks (SBUX US) have risen in line with the S&P 500 Index year-to-date, with both yielding 8% and 8.5%, respectively.   However, over $1.62 billion of exposure is currently at risk on the short side by bearish speculators betting on Starbucks stock price to eventually get roasted.

The number of shares being borrowed by short sellers has risen from 13.076 million shares reported on 12/30/16, to an S3 real-time projection of 26.52 million shares, an increase of 102.8%.  More importantly, the amount of money being put at risk has surged from $726.03 million on 12/30/16, to $1.62 billion today, an increase of 122.5%.  This is in contrast to bears being down $70.8 million, or 7.05%, so far on an average short position of $1.01 billion for 2017.
As seen in the chart above, the bears are demonstrating strong conviction by continuously borrowing shares to grow their short exposure.

With Wedbush Securities coming out today with an analyst note downgrading Starbucks stock to Neutral from Outperform citing valuation concerns, anticipate bears to continue to push additional chips (or coffee beans in this case) on the table.

Want deeper insight into the above analysis? Contact:
Director, S3 Partners

The information herein (some of which has been obtained from third party sources without verification) is believed by S3 Partners, LLC ('S3 Partners') to be reliable and accurate. Neither S3 Partners nor any of its affiliates makes any representation as to the accuracy or completeness of the information herein or accepts liability arising from its use. Prior to making any decisions based on the information herein, you should determine, without reliance upon S3 Partners, the economic risks and merits, as well as the legal, tax, accounting and investment consequences, of such decision.

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