Facebook (FB) has quietly gained back half of its decline from its $38 IPO price since it bottomed out in early September. As the stock has rallied, short sellers have been running for the exits.
Below is a chart of Facebook's short interest as a percentage of float (SIPF) since it IPO'd back in May. As shown, short interest peaked at 19.4% of float just before the stock made its 2012 low, and SIPF has declined significantly since then. The most recent short interest figures for Facebook showed just 5.8% of its float sold short. Early on during the stock's current rally, short covering provided a big boost. Unfortunately for Facebook bulls, there are now a lot less shorts out there to potentially cover, which makes it more difficult for the stock to rally. Gains going forward will have to come from new buyers stepping in instead of short sellers throwing in the towel.