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.
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Director, S3 Partners
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