New short interest data for SolarCity ( $SCTY ) came out after the close yesterday and it showed 3.2 million more shares had been sold short, an increase of over 13% from the previous period, which was just two weeks prior. With the stock down 48.5% just this year, and 26.5% since February, it's easy to see why there would be an increase. The question now becomes, with sentiment shifting on the stock and rumors of the company being taken private by Elon Musk - who is Chairman - do shorts have it wrong? At some point the market will answer that question. For now, lets take a quick look at what I think will become an explosive problem in the coming days, the possibility of a 'Naked Short'.
I compiled quite a few of the holdings of SolarCity ( $SCTY ) stock by institutions and insiders. It was not all the holdings and filings and does not include any retail. I then added the new short interest number and subtracted that total by the float. That number came to a staggering 39.5 million shares. Does that mean there are 'Naked Shorts' out there? Maybe my Math is wrong or a few parties already liquidated large positions? I truly struggle to find an answer, but what I do know, is if the stock continues to break higher, it can possibly enjoy an epic short squeeze.
On December 1st, 2015 I posted similar data that showed 29 million shares possible being 'Naked Shorts'. The stock ran 99% in the next 13 trading sessions. Coincidence? Maybe. But I certainly will be around to see if this squeeze plays out for round number 2.
Here is compiled holdings:
I current hold March calls on the stock, and may add or close my position at any time.
Happy Trading!
-JB