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Nov 6, 2018

S3 Analytics: GreenSky Misses Quarterly Rev Target, Shorts up $49 million on 35% Drop

GreenSky Inc. (GSKY) is down 36% today and down 59% from its May IPO price of $23 on lower than expected quarterly revenues and less than upbeat forecast for the rest of the year. GreenSky’s stock is down over $5/share today and short sellers are up $49 million in mark-to-market profits, doubling their year-to-date profits and are now up $95 million since GreenSky’s IPO.

GreenSky’s short interest is $137.88 million, 9.41 million shares shorted, 21.50% of its float. GSKY short interest has been increasing steadily since its IPO as short sellers have been selling into its price weakness right from the start.

GSKY short selling had plateaued over the last week, but today’s price move has spurred on additional short selling, with 400,000 additional short shares hitting the tape this morning. There is still ample GSTK stock left to borrow and rates are still hanging on to General Collateral levels, but if short selling continues we are on the verge of stock borrow rates beginning to move higher.

With GSKY’s stock price below $10/share and year-to-date mark-to-market P/L nearing $100 million, we may see some short covering happening if GSKY’s stock price ticks up after today’s drop. Short sellers who have made over 50% on their trade since May, will be quick on the trigger to cover their shares and realize their profits if GSKY’s stock price starts to move against them. We may see further downside volatility or new upside volatility in the near future, but the odds of share price stability seems low. GSKY option trading looks to be much heavier on the call side which means the market is looking for a near term share price rebound. A sudden price move to the upside may trigger a “profit short squeeze” by the short sellers – buying to cover in order to book profits, not limit losses.

Want deeper insight into the above analysis?
Contact:  Ihor.Dusaniwsky@S3Partners.net
                 Managing Director Predictive Analytics, S3 Partners, LLC
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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