GrubHub Inc (GRUB) short sellers were already up +$369 million, +32%, in year-to-date mark-to-market profits before GRUB reported disappointing earnings and a fourth quarter revenue guidance that was well below analystsâ€™ expectations. GRUBâ€™s stock price reacted to a flood of long selling and is down over -40% on the day. Shorts are up over half a $ billion of net-of-financing mark-to-market profits on the price drop.
GRUB short interest is $1.20 billion; 20.60 million shares shorted; 22.63% short interest % of float; and a 0.30% stock borrow fee (general collateral.) Shares shorted were decreasing after hitting a year-to-date high of 22.86 million shares in mid-August. After falling to 19.58 million shares shorted, shorts increased their exposure by 1.02 million over the last two months.
We saw active GRUB short selling recently, with an increase of +768k shares, +4%, over the last month and +193k shares, +1%, over the last week even though the stockâ€™s price has been on a recent uptrend.
GRUB is the 4th largest short in the Internet & Direct Marketing sector, but the most profitable short. In fact, every short in the top ten most shorted stocks in the sector besides GRUB and Stamps.com (STMP) lost money for short sellers.
GRUB shorts are up +$874 million in net-of-financing mark-to-market profits for the year, which includes a gain of +$504.4 million on todayâ€™s -42% price move. Shorts were down -$45.7 million in October, but todayâ€™s gain has put them $458.7 million into the black.
Increased competition from the likes of Uber and DoorDash will continue to put pressure on GrubHubâ€™s bottom line and increase the cost of customer acquisition and retention. Short sellers have been re-building their exposure over the last month and a half and with todayâ€™s windfall of mark-to-market profits we expect more short sellers to belly up to the table and order up more GRUB short sales. It would not be a surprise if GRUB shares shorted hit a new high by year-end.
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Managing Director Predictive Analytics, S3 Partners, LLC
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