• Research

May 11, 2018

S3 Analytics: Symantec Shorts up $215 million on 33% Stock Price Decline

Cybersecurity software maker Symantec Corp’s (SYMC) stock price is down 33% in mid-afternoon trading on news of an internal investigation which could affect the firm’s financial reporting and guidance. In addition, Symantec reported that first quarter profits would be $0.06-$0.10/share below expectations of $0.41/share as per Bloomberg, and overall revenue would be below expectations as well.

Short interest in the sector had been increasing in 2018, with worldwide short interest of $16.11 billion, up $1.2 billion or 8% for the year. Symantec’s short interest increased at a far greater rate than the overall sector, increasing by $150 million, or 24%, to reach $817 million after hitting its year-to-date high of $909 million in late April.

The overall S&P 500 Systems and Software Index is down 1% on the day but still up 11% for the year. Most shorts in the top ten most shorted stocks are, as expected, down for the year as the sector outperformed the entire S&P 500. The top ten shorts were down $1.7 billion for the year in mark-to-market losses prior to today’s trading, a return of -12.1% on $13.7 billion worth of shorted stocks.

Symantec shorts were down $52.3 million in mark-to-market losses for the year prior to today’s announcement. After increasing their short exposure by $283 million, or 33%, in the second quarter SYMC short sellers are up $268 million in mark-to-market profits on today’s 33% stock price decline. SYMC’s year-to-date mark-to-market short P/L is now in the black, up $215 million for the year.

With over 100 million shares changing hands today, almost 17 times average trading volumes, we expect SYMC’s short interest to increase significantly. SYMC short sellers have been actively shorting since the beginning of February, and even a 16% rally in April and May did not stop them from shorting an additional 4.2 million shares. With its stock price down 33% today, SYMC shorts may be active in the upcoming week.

Want deeper insight into the above analysis? Contact:
Managing Director Predictive Analytics, S3 Partners, LLC
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