Sydney Kramer
- Beyond Meat short sellers have lost $604 million in mark-to-market losses betting against the stock, according to data from S3 Partners.
- Still, short sellers are not exiting the trade.
- "Even when a short closes out their position, there is another short standing right behind them ready to take the stock borrow and short the stock in their place," said Ihor Dusaniwsky, the managing director of predictive analytics at S3.
- Watch Beyond Meat trade live.
There is no short squeeze on Beyond Meat shares - yet.
Traders who have bet against the best-performing US IPO of the year are stubbornly holding their positions against the plant-based meat alternatives company, even as the stock price continues to climb. In early trading Tuesday, shares of Beyond gained as much as 15%, marking a 680% increase from its May IPO.
For short sellers, the bump resulted in $38 million of mark-to-market losses today alone. But that pales in comparison to what unfolded on Monday, when Beyond bears lost $100 million in a single session as the stock climbed as much as 10% on a report that Beyond would release a new ground beef product to grocery stores June 24.
"Even with the large losses, expensive short financing costs, and stock loan recalls hitting the street, short sellers have not succumbed to a short squeeze, yet," said Ihor Dusaniwsky, the managing director of predictive analytics at S3 Partners in an email to Markets Insider.
Short sellers are now down $604 million in post-IPO mark-to-market losses, Dusaniwsky said. But even with losses climbing, short sellers aren't showing signs of slowing down.
Short interest on Beyond shares - or wagers on the stock will decline - has swelled to $920 million, and very few short sellers have exited the trade or covered shares, which means buying out of a short position.
"Shares shorted has been very stable in June, although we did see a speck of short covering over the last week," Dusaniwsky said.
In June, shares shorted grew 0.11% while shares covered declined 3%. Traders covered 152,000 shares, but still have 5.42 million shares shorted, according to S3 data.
S3 Partners
The borrow fee to short Beyond shares is also climbing again, Dusaniwsky said. The fee has exceeded 100% in the past, meaning that it was more expensive to bet against the stock than to own it. Tuesday, the borrow fee for Beyond shares was slightly more than 82% with new stock borrows going over 90%, said Dusaniwsky. High stock borrow prices can discourage short sellers from staying in a bearish trade, as it can be too expensive to keep the position over time.
But for now, short sellers aren't budging. And even more interestingly, Dusaniwsky says, is that "even when a short closes out their position, there is another short standing right behind them ready to take the stock borrow and short the stock in their place."
In other words, the short position has been kept strong because traders are waiting in line for shares to bet against. The perceived hype around the meteoric rise of the stock has also helped.
"It looks like there are a lot of momentum shorts looking to get into this trade since they see BYND as an overbought stock at the moment," said Dusaniwsky.
This has also kept short sellers in the game, betting that Beyond will reverse when the frenzy dies down.
"Until shorts start exiting their positions, there is no short squeeze," said Dusaniwsky. "Just buyside pressure from long shareholders forcing up BYND's stock price."
Shares of Beyond Meat are trading up more than 600% year to date.
