26% of Archer’s ACHR Stock Float Is Being Sold Short

Source: T. Schneider / Shutterstock.com

Short sellers have taken a particular interest in Archer Aviation (NYSE:ACHR) stock in recent months. Archer’s short interest as a percentage of float has increased consistently since June 15 according to MarketBeat, which updates short interest in the middle and at the end of each month.

As of Oct. 15, ACHR stock carried a short interest of 29.2%, which is equivalent to 40.29 million shares being shorted with a value of $205.88 million. That rose compared to the short interest of 25.1% on Sept. 30. Fintel updates its short interest data more frequently and currently shows a short interest of 26.32%.

Generally, a short interest above 10% is considered high, while a short interest above 20% is considered very high.

ACHR Stock: Short Sellers Take Interest to Archer

So, why do short sellers seem to be taking an interest in Archer Aviation? First off, shares of the company have flown higher by about 140% so far this year, vastly outpacing the S&P 500’s return of 10%. These short sellers may believe that ACHR stock is overvalued in the face of a questionable macroeconomic environment. On top of that, Archer was a pre-revenue company up until last month, when it announced that it had received “nearly $1M” from the U.S. Air Force in exchange for a mobile flight simulator. Its revenue prospects largely depend on the success of its electric vertical take-off and landing (eVTOL) aircraft called the Midnight.

Archer was also the subject a short report published by Grizzly Research back in August. Grizzly questioned Archer’s test flights and also accused it of buying credibility through partnerships with United Airlines (NASDAQ:UAL) and Stellantis (NYSE:STLA). Grizzly’s report may have had an effect of attracting short sellers to the stock.

Meanwhile, short sellers have appeared to gain confidence as ACHR has fallen in recent months. For example, Archer’s short interest was 14.1% on July 31 when shares traded at $6.73. On Oct. 15, short interest was 29.2% while the stock traded at $5.11 per share.

Another factor to consider is the cost to borrow (CTB) fee, which reflects the annual rate that short sellers must pay to borrow stock. Surprisingly, the fee currently clocks in at just 5.25%. That’s still higher than the average CTB fee between 0.3% and 3%, but not as high as expected when factoring in the high short interest figure.

On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines

Eddie Pan specializes in institutional investments and insider activity. He writes for InvestorPlace’s Today’s Market team, which centers on the latest news involving popular stocks.

Source link

Share with your friends!

Leave a Reply

Your email address will not be published. Required fields are marked *

Get the latest stocks updates
straight to your inbox

Subscribe to our mailing list and get interesting stuff and updates to your email inbox.

Thank you for subscribing.

Something went wrong.