- Traders short selling SmileDirectClub had a lot to smile about on Wednesday, earning paper profits of over $115 million as the online dental company’s stock plummeted 26% following a disappointing quarterly report.
Traders borrowing SmileDirectClub shares to make new short bets on Wednesday were paying the equivalent of more than a 31% annual interest rate, up from 26% the day before, reflecting a scarcity of additional shares available to short, according the S3 Partners. Short sellers borrow shares and then sell them, hoping to buy them back at a lower price and then return them to their owners.
“While it likely has now set a more achievable bar, we view that the latest meager print and revenue/profit guide will not instill greater enthusiasm for the stock,” Credit Suisse analyst Erin Wright wrote in a note to clients.
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