Under Armour Short Sellers Profit $400 Million In One Day, But Stage Is Set For Short Squeeze

Under Armour Inc UAA shares are bouncing back modestly on Wednesday after being hammered by 25.7 percent Tuesday following a huge Q4 earnings miss.

Short sellers have piled into Under Armour stock so far in 2017 and made a killing during Tuesday’s collapse. However, with Under Armour growth expectations now in the dumpster, the stock’s large (and growing) short interest could be setting the stage for a short squeeze.

Under Armour certainly caught the market off guard when it reported only 12 percent revenue growth in Q4, breaking a streak of 26 consecutive quarters of at least 20 percent growth. However, those numbers were exactly what short sellers were hoping for.

S3 Partners reports that Under Armour short sellers collectively made $400 million in profits on Tuesday. Under Armour’s short interest is up 13 percent so far in 2017. According to shortsqueeze.com, Under Armour’s short interest stands at 11.2 percent. There are currently more than 41.1 million shares held short with 14.0 days to cover.

The Wall Street Journal’s Steve Russolillo reported that Under Armour is currently the most heavily-shorted stock in the entire S&P 500.

The combination of high short interest and low expectations certainly makes Under Armour a candidate for a major short squeeze down the line. If the company shows any signs that that its recent weakness was temporary rather than secular, shorts may soon be scrambling to cover.