Beyond Meat Incâ€™s (BYND) stock price soared to $201.88 at the open, a +19% move, after being up 12% on Monday. BYND short sellers took a $100 million mark-to-market hit to their P\L yesterday and were down an additional $173 million in mark-to-market losses at the open. At the open, short sellers were down $739 million in mark-to-market losses since BYNDâ€™s IPO. BYNDâ€™s stock price could not hold their early morning gains and is now up just under $1 for the day. Shorts are now down only $4 million in daily mark-to-market losses, down a total of $570 million in mark-to-market losses since the IPO.
Most of BYNDâ€™s short selling occurred in May, and with lendable supply getting used up, we have not seen any material change in BYNDâ€™s shares shorted. Shares shorted increased by only 5,764 shares, +0.11%, in June as BYNDâ€™s stock price rose over 63%. Over the last week there was a slight drop in BYND shares shorted, decreasing by 152 thousand shares, -2.73%. For the most part short sellers are not capitulating in the face of expensive financing costs and large mark-to-market losses. Even when shorts do close out their positions, there is another short standing right behind them ready to take the returned stock borrow and short the stock in their place.
With BYND short interest declining slightly and its stock price taking a momentary respite from its post IPO rally, weâ€™ve seen stock borrow costs ease. Rates on existing shorts topped 150% fee on June 11th and intra-day stock borrows ranged from 200% to 600% fee from June 6th to June 12th. Stock borrow costs are now 82% fee on existing short positions, and new borrows are running at an 80% to 98% fee.
In just month and a half BYND has become the fifth largest short in the Packaged Food & Meats Sector, jumping ahead of Campbell Soup Co (CPB) this week, and the least profitable short trade in the sector. If BYNDâ€™s stock price continues to move higher its short interest should climb up to take the number three spot behind McCormick Co (MKC).
Short sellers are not only taking on the full brunt of BYNDâ€™s post-IPO rally, they are also paying dearly for the experience, paying just over $2 million per day in financing costs just to keep their short positions on. B & G Foods Inc (BGS) is the only other stock in the Packaged Foods & Meats Sector that has non-General Collateral stock borrow rates.
Whatever shares that were left to short were probably taken down in todayâ€™s price volatility. I would expect stock loan rates to get more expensive as some lending long shareholders must have sold into this morningâ€™s rally and momentum short sellers are pressing to get locates and sell volatility. The resulting decrease in supply and increase in demand should move BYNDâ€™s stock borrow rate back over 100% fee.
A BYND short squeeze and a short covering (buying) rally may be just around the corner. Many short sellers are getting closer to the tipping point of closing out their positions due to expensive stock borrow rates, stock loan recalls and massive mark-to-market losses. This morningâ€™s short lived 19% price spike might have triggered the first wave of a short squeeze if it had lasted, but its capitulation may have emboldened short sellers to reverse course and hold onto their exposure.
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