Why Is Short Interest In Best Buy Less Than Its Peers?
BlackBull Markets | Aug 22, 2022 08:27PM ET
Best Buy (NYSE:BBY) had roughly 12 million shares in short interest on the last trading day, reflecting 5.97% of its outstanding shares. By midday, Aug. 19, 5.5 million Best Buy shares are stock dipped nearly 4% at the close of trading on Aug. 19 and had another marginal decline at the start of this week. The company’s stock was almost in the green last week after peaking at $86.35 on Tuesday and creating a new multi-month high. However, BBY eventually closed lower on the week due partly to the 4% drop.
Despite the challenges it had to endure, Best Buy remains absent from the list of most shorted stocks. The list of stocks on the most-shorted list in August includes Intercept Pharmaceuticals (NASDAQ:ICPT), Bed Bath & Beyond (NASDAQ:BBBY), MicroStrategy Incorporated (NASDAQ:MSTR), WeWork Inc (NYSE:WE), Upstart (NASDAQ:UPST), and Beyond Meat (NASDAQ:BYND).
All the above stocks have short interest above 35.00% of their outstanding shares. Best Buy's peer group average for short interest as a percentage of the float is 25.57%, which means it has far less short interest than most of its peers.
h2 Second-Quarter Outlook/h2Given current macroeconomic conditions, the company is sailing in murky waters like other retailers. The high inflation rate, interest hikes, and energy costs could add more challenges to these companies.
For Best Buy, some think the company's revenue and profitability are on track to recovery after record lows in the first quarter, setting the stage for a long-term rebound after bottoming in July.
However, Best Buy may not be so bullish on its outlook. BBY is slated to announce second-quarter results on Aug. 30 and expects to report a roughly 13% decline in comparable sales and an approximately 7.5% hike in revenue compared with the pre-pandemic second quarter of the fiscal year 2022.
Best Buy CEO Corie Barry said,
"As high inflation has continued, and consumer sentiment has deteriorated, customer demand within the consumer electronics industry has softened even further, leading to Q2 financial results below the expectations we shared in May."
The company also plans to suspend share buybacks but assured the payment of quarterly dividends.
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