/ Mike Segar
GoPro short sellers made roughly $45 million in
mark-to-market profits on Monday as the company’s stock plunged
as much as 33%.
The stock is feeling pressure following an announcement
that GoPro will lay off more than 250 employees and exit the
While GoPro‘s stock came under serious
pressure on Monday, there was one clear winner in its investor
base: traders betting against the company.
They raked in roughly $45 million in mark-to-market profit as the
company’s stock plunged as much as 33%, according to data
compiled by financial analytics firm S3
The drop came after GoPro announced plans to lay off
more than 250 employees and exit the drone industry, both in an
attempt to return to profitability by the end of 2018. The
selling did subside somewhat later in the session, however, on a
CNBC report that the company
had hired JPMorgan to oversee a potential sale. Later in the day,
GoPro CEO Nick Woodman told Bloomberg
the company would be open to sale, but isn’t actively shopping
GoPro’s stock saw a spike in downside bets amid the negative
news, with traders initiating nearly 1.5 million of new short
sales. The wagers were so sought-after, in fact, that existing
shorts were paying a fee of almost 15% just to keep financing
their exposure, according to S3.
GoPro is now the fourth-most shorted company in the worldwide
consumer electronics sector, trailing only Garmin, Sharp, and
Roku, according to S3 data. Following Monday’s windfall, GoPro
short sellers have now made a total of $42.5 million betting
against the company this year.
The direction of GoPro shares from here will hinder on whether
long shareholders end up abandoning positions, says S3. That’s
because borrow supply was all but vanished amid the short selling
extravaganza, leaving allegedly bullish traders in charge of the
One thing that could cause a short-term recovery in GoPro’s stock
would be short sellers being forced to cover their positions due
to stock borrow recalls, according to the firm.
Article source: Google Short Sales RSS