Turtle Beach Corp (HEAR) short selling had been on a tear for most of September and only slowed down due to lack of lendable inventory to support short locates. HEAR shares shorted in nearly topped out and just over 8.4 million shares because there is very little stock left to borrow. There is still strong demand to short the stock and whatever scraps that are left to borrow are going at over 100% fee levels. HEAR shares shorted are up 26.4%, +1.8 million shares, in February and March ahead of todayâ€™s earnings report.
Turtle Beach Corp (HEAR) short interest is $134.46 million; 8.42 million shares shorted; 68.29% of its float; stock borrow is 47% fee on existing shorts and 100% to 120% fee on new shorts. HEAR is the 7th largest short in the Worldwide Consumer Electronics Sector.
If Turtle Beachâ€™s earnings beat analyst expectations and HEARâ€™s stock price spikes we will probably see shorts running for the exits as they are already down $16 million in year-to-date mark-to-market losses, -14.11%. The yoke of 46% to 120% fee stock borrow fees will weigh heavily on any continuing short investment decisions that are already under water.
If Turtle Beach earnings underwhelm, there is the potential that long sellers who are up 600% over the last year may close up shop and sell their longs in order to realize their considerable profits. If these long shareholders happen to be stock lenders, then shorts sellers may be in danger of losing some of their already thin stock loan inventory.
Either way, todayâ€™s earnings numbers will have a pronounced effect on Turtle Beach shorts.
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Managing Director Predictive Analytics, S3 Partners, LLC
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