Heavily shorted stocks surge in internet retail rally
A rebound for many stocks populating the e-commerce space was dotted with a particularly strong upward move from some heavily-shorted stocks.
Notable names rallying on Tuesday included The RealReal (NASDAQ:REAL) +17.94%, Stitch Fix (NASDAQ:SFIX) +10.22%, Revolve Group (RVLV) +5.43%, Carvana (NYSE:CVNA) +9.48%, Solo Brands (NYSE:DTC) +12.08%, Blue Apron Holdings (APRN) +9.08%, Wayfair (W) +6.05%, and Newegg Commerce (NEGG) +11.08%. In each case, double-digit percentages of the stocks’ floats are held short, with many percentages rising above 30%. For example, short interest in Blue Apron stands at over 39%, according to Seeking Alpha data.
To be sure, the rally among online retailers was not resigned to only those retailers with elevated levels of short interest. Farfetch (FTCH) +9.84%, MercadoLibre (MELI) +4.84%, and Coupang (CPNG) +4.98% were among gainers on the day, also indicating the global upward trend among e-commerce stocks on Tuesday.
Additionally, the sharp gain for The RealReal and Farfetch may point to continued confidence in luxury retailers despite macroeconomic troubles. Luxury consumers, understandably less impacted by inflation, have shown a strong proclivity to continue big ticket purchases into year-end, as shown in recent reports from LVMH (OTCPK:LVMUY).
That trend likely extends beyond e-commerce as well, with persistently positive traffic to luxury retail hot-spots noted by data analytics firm Placer.ai.
“Looking ahead to the holiday season, positive trends in the luxury department store space are likely to continue as these brands are a destination for affluent consumers shopping for big-ticket gifts,” a report published on Monday stated. “Analysis of some of the most popular corridors – Michigan Ave in Chicago, Walnut Street in Philadelphia, 5th Ave in New York, Rodeo Drive in Beverly Hills, and Brickell District in Miami – revealed strong visits heading into the holiday season.”
The report noted that the traffic trends should be positive not only for the highest-end retailers like LVMH, but Macy’s (M) subsidiary Bloomingdale's, Nordstrom (JWN), and Neiman Marcus. Both Canada Goose (GOOS) +5.05% and Tapestry (TPR) +5.24% also rose on Tuesday.
Rather conspicuously, some of the largest e-commerce players like Amazon (AMZN), Etsy (ETSY), and eBay (EBAY) only edged slightly upward.
Read more on Seeking Alpha contributor Albert Lin’s expectations for Amazon as it prepares its Q3 report for Thursday evening.