Aterian short sellers just hit a wall. The cost to borrow exploded to 292% APR — up from 3.3% a week ago, a 8,869% surge. The lending pool is now fully exhausted.
Availability has collapsed to zero. Every share in the lending pool is currently lent out — the tightest the borrow market has been in at least a year. This didn't happen gradually. As recently as April 27, the cost to borrow was just 4%. It jumped to 77% on April 28. Then 292% yesterday.
Short interest drove the crunch. SI hit 8.65% of free float on April 29. That's up 160% in one week and 312% in one month. Shorts piled in fast and found a thin lending market unable to absorb the demand without repricing sharply.
The options market flagged the same dislocation. The put/call ratio hit 0.27 on April 29. That sounds modest, but it sits 4.3 standard deviations above its 20-day mean of 0.16. It's the highest PCR reading in months. Options traders moved in the same direction as short sellers — just by a different route.
The ORTEX short score jumped from 52.8 to 71.5 in a single day on April 28. That's a near-20 point move in 24 hours. The short score ranks in the 3rd percentile of all stocks — meaning almost no stock in the universe scores lower on the short sentiment scale. The DTC rank sits at the 76th percentile. The utilization rank is at the 5th percentile, reflecting how extreme the borrow demand is relative to available supply.
ATER next reports earnings on May 14. The stock has fallen on each of its four most recent earnings events — the 5-day move after the last two prints was -5.7% and -18.2% respectively. With the stock up 89% over the past month and nearly 48% in the past week, the combination of an elevated share price and a fully exhausted borrow pool sets up a potentially volatile path to that date.
What to watch: Whether cost to borrow sustains above 100% as the earnings date nears, and whether availability remains at zero or opens up if short sellers cover ahead of the print.
See the live data behind this article on ORTEX.
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