GrubHub Short Sellers Are Back

GrubHub, Inc. GRUB is one of the most heavily shorted stocks on Wall Street, but financial technology and analytics firm S3 Partners analyst Ihor Dusaniwsky said Wednesday GrubHub short sellers have been aggressively selling the stock this week after an extended absence.

A Popular Short

GrubHub has an outstanding short position of 15.12 million shares worth about $1.07 billion. That short position makes GrubHub the fifth most shorted stock in the U.S. Internet & Direct Marketing Retail sector behind only Amazon.com, Inc. AMZN, Wayfair Inc W, Booking Holdings Inc BKNG and Expedia Group Inc EXPE.

In terms of short percent of float, GrubHub’s 16.6 percent ratio is higher than any of the other companies mentioned other that Wayfair (24 percent).

GrubHub short sellers have had a pretty good start to 2019 with the stock down more than 10 percent in a hot market. Dusaniwsky said short sellers started piling into the stock starting at around September of 2018. From September to February of 2019, GrubHub’s short position tripled, increasing by about 10.3 million shares. During that stretch, the stock’s share price dropped by more than 40 percent.

Short Sellers Return

In the month of March, however, Dusaniwsky said short sellers seemed to take a breather, decreasing their position by 392,000 shares in the first couple of weeks of the month. Dusaniwsky said short sellers returned aggressively on Wednesday, triggering a spike in GrubHub’s short position.

“Increased competition and declining user trends, as highlighted by Andy Hargreaves of Keybanc Capital Markets, may spur short sellers to increase their short exposure to the stock,” Dusaniwsky wrote in report.

GrubHub has been a profitable trade for short sellers in the past two quarters. Dusaniwsky said short sellers collectively netted$436.3 million in profits in the fourth quarter of 2018 and are up another $110.3 million so far in the first quarter of 2019.

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Photo courtesy of GrubHub.