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Oct 25, 2017

S3 Analytics: Short Sellers Re-Focusing on GoPro

Bearish speculators are amping up their bets against GoPro (GPRO US) in October, as short interest is now reaching highs last seen at the beginning of the year.

S3 Partners calculates real-time short interest to be 34.5 million shares, equating to 35.7% of the float, with $324.6 million of real money at risk wagering on a price decline.
This is an increase of 39.5% and 41.4%, respectively, when measured on a shares shorted and dollars at risk basis, since the end of August when 25.7% of the floated shares were being utilized by short sellers.  

A catalyst for the recent surge in short interest we have seen could be directly attributed to Alphabet Inc. Google’s announcement of a new smart video camera Clips, which is a potential competitor to GoPro’s Hero.  Although some analysts are now calling the immediate GPRO stock sell-off a bit overblown, short sellers continue to increase their positions.

Short conviction is so high on GPRO that spot rates for the limited availability left to borrow has spiked to fees as high as 40% range today.  This is despite bears being down $93.1 million, yielding a negative 34.5% return year-to-date, net of financing costs.    

With 3Q earnings due to be announced next week, another surprise beat may send the shares roaring higher, with the added help of a squeeze due to the elevated short interest.  

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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