Snap Inc. (SNAP) is up over 166% in 2019 and shorts are down $1.02 billion, -99.74%, in mark-to-market losses for the year. Unlike Tesla short sellers who refused to cover their short positions in the face of mounting losses, SNAP short sellers felt the squeeze and covered more than half their outstanding short shares. Since February, when we saw the start of the short squeeze, SNAP shares shorted declined by 75.1 million shares, a decrease of 52%.
SNAP is the fifth largest short in the domestic Interactive Media & Services sector, behind Facebook Inc, Alphabet Inc, Match Group Inc and Zillow Group Inc. While Facebook and Alphabet shares shorted are both down by almost $2 billion in aggregate, we are seeing new short selling in both securities. SNAP short covering has been steady for most of 2019 and weâ€™ve seen an additional $252 million of covering in June versus $860 million of short selling in Facebook and Alphabet.
SNAP short sellers helped boost its stock price by covering over 66 million shares in 2019, but additional short covering may be more muted as SNAPâ€™s short interest has been trading in a $200 million range from mid-March to the present. Short sellers have been delta hedging their SNAP short exposure, keeping it between $950 million and $1.15 billion, as SNAPâ€™s stock price ricocheted between $10/share and $15/share.
As long as SNAPâ€™s stock price continues to trend upwards, SNAPâ€™s short squeeze should continue. Expect more short covering on price strength as short SNAP short sellers keep their dollar exposure relatively flat by covering shares. If SNAPâ€™s rally eventually loses steam and gives back some of its 166% year-to-date move, I would expect SNAP short sellers to short the stock in size in order to recoup some of their $1 billion of year-to-date losses.
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