All five FAANG stocks were down yesterday, generating $969 million worth of mark-to-market net of financing profits for short sellers. Today, we see a mixed market with Apple (AAPL), Amazon.com (AMZN) and Netflix (NFLX) rebounding while Google (GOOG/GOOGL) and Facebook (FB) continuing their downward price trend. In total, the $37.4 billion of FAANG short sellers are up $47 million in mark-to-market profits for the day, bringing their two day total to just over $1 billion in profits.
Amazon.com had the largest rebound of the five FAANG stocks, up almost 2% on news that it may buy some Toys ‘R’ Us Stores and the announcement that its successful “All or Nothing” NFL series will be extended to other sports including college football (Michigan), rugby (New Zealand All Blacks) and soccer (Manchester United).
Facebook, on the other hand, is continuing its downward slide, down almost 5% today on news that it may be investigated by the FTC regarding personal user data protection. The U.K. Parliament has also asked Chairman and CEO Mark Zuckerberg to testify and “give an accurate account of this catastrophic failure of process.” Google’s stock price is down half a percent on the Facebook investigation news.
Today’s Facebook’s trading volume is nearing 110 million shares, five times larger than its monthly average, and we can expect that a portion of that will be short selling. Facebook short exposure will probably climb by over $1 billion over these few days as short momentum traders pile into the name. This new short activity will not be very “sticky”, and we can expect a significant amount of buy-to-covers if and when Facebook’s stock price stabilizes and rebounds. This added buying pressure will augment “buyers on the dip” and bargain hunters and the speed of Facebook’s rebound will probably by quick and sudden.
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Managing Director Predictive Analytics, S3 Partners, LLC
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