Google: Short Interest Increases on Job Cuts News

Google (GOOG) has admitted it can no longer defy the laws of economic gravity and is cutting 10,000 jobs. The biggest single business idea in history, with turnover in excess of $21bn during 2008, has told the world's press it will cut its workforce by 10,000, about a third of the total number of staff. Quarter-on-quarter revenue growth, which hit 14% last year, was only 3% in the last three months to September 30. In Britain, this growth has all but stalled, with revenues falling from £406m in the first quarter to £392m in the second and rising only slightly to £409 in the third.

As you can see from this graph which shows the percentage of Google's shares outstanding on loan to short investors (%SOOL), short investors have started to increase their positions in the Internet giant, with the %SOOL rising from 0.8% in late October to 2% one week ago and then back down to 1.74% now, a three-year high. Utilisation, or the percentage of the supply out on loan, has risen to 10% from 4% in early November, above the previous three-year high figure of 7.5%.

click to enlarge

Yahoo's (YHOO) %SOOL has also increased, up from 0.5% in early November to 1.65% now. Utilisation has also spiked in Yahoo, and is up from 3% to 9% in the same time frame.

click to enlarge

Disclosure: None

Comments

[Serendipity:]

Your post is ignorant of the facts. Google has NOT said they will eliminate 10,000 jobs. They have only said that SOME of the 10,000 non-employee contract positions may be eliminated. This is a good thing for the company, as evidenced by the big rise of over $24 after it was disclosed yesterday. The cost savings will result in an improved margin and greater profitability for GOOG.

2008 Nov 26 08:24 AM

[User 237841:]

Not a bad thing, as Google is famous for over-hiring. As for the increased short interest, shorts tend to pile on at market bottoms, as longs do at tops. Nothing starts a rally off with a good bang like frenzied short covering.

Question: What do you call a short seller after he's sold?
Answer: Buyer.

2008 Nov 26 09:07 AM

[PR Department:]

I think you should stick with day-time PR job rather than try to do stock analysis. Google has not announced any job cuts. They said they may let go of some of their 10,000 contractors - which are not part of their employee base, and does not really constitute has layoffs. Google has 20K employees total, and your post suggests that they are getting rid of 50% of their work force.

Pls do not post ignorant messages like this again, ever.

2008 Nov 26 10:31 AM

[icebox:]

This is one of the dumbest "investment" analysis articles I've ever read. Two things. One, Google is letting go some of its 10,000 contractors, not regular staff. There is a seasonal aspect to this as well.

Two, the fact that short selling is increasing is actually good news for the stock. The shorts have gotten squeezed the last 3 days and are covering their positions desperately. The short selling herd is usually wrong. This increased short selling tells me that amateurs who have never shorted a stock before are shorting GOOG because it looks sooooo easy...
They will soon find out what it's like to get burned on the short side, and will probably never try shorting again.

2008 Nov 26 02:47 PM