“Stock prices fell by 26% in the first week of the new year alone” Wall Street hedge funds concentrated on ‘short selling’ bets on some stocks

Top short-selling stocks such as ‘electric car Fisker, alternative meat company Beyond Meat, and used car company Cabana’
Short selling also focused on 'eco-friendly stocks', which were selected as the industries that benefited the most from interest rate cuts
Beyond Meat's stock price fell 'about 96%' from its peak due to skepticism about the vegetarian trend in general

The stocks on which Wall Street hedge funds are betting on a decline in stock prices have been revealed. Included are eco-friendly stocks, which have been cited as the industries that benefit the most from this year’s base interest rate cut, as well as alternative meat-related stocks, which have spread skepticism throughout the industry, and some electric vehicle and AI stocks. While the majority of stocks with a high proportion of short sellers are experiencing a large decline in their stock prices in the first week of the new year, some stocks are showing a clear rise in their stock prices, contrary to expectations.

Focus on short selling on related companies such as small banks, major sports, eco-friendly vehicles, and electric vehicles

According to a report by the U.S. CNBC program on the 4th (local time) citing data from financial information company FactSet, the proportion of short sales in listed stocks in the S&P 500 index is about 5% on average, while the proportion of short sales in stocks that Wall Street hedge funds bet on will decline. reached up to 57%.

As of the 15th of last month, among companies listed on the New York Stock Exchange and the Nasdaq Stock Exchange, 1 stocks with a market capitalization of more than $1,300 million (approximately 25 billion won) and a short selling ratio of more than 20% were selected. △ Commercial bank dealing with small and medium-sized businesses and individuals. Riley Financial (RILY) 57% △Electric car company Fisker (FSR) 45% △Alternative sports company Beyond Meat (BYND) 42% △Vending machine-type used car sales company Cabana (CVNA) 37% △Artificial intelligence (AI) development company Short selling was concentrated on 3% of C36.ai (AI). In particular, in the case of Fisker, its stock price fell 26.1% in the first week of this year alone. This is the result following a 76% plunge in stock prices last year. Fisker’s short selling balance surged 11% in just 30 days from 9,000 million shares on November 10 last year to 440 shares.

Short selling was also concentrated on eco-friendly stocks, which were considered to be the stocks that benefited the most from the U.S. Federal Reserve’s (Fed) interest rate cut this year. Representative examples include △Sunnova Energy (NOVA) 34% in the solar energy sector, △Sun Power (SPWR) 33%, and △Blink Charging (BLNK), an electric vehicle charging platform in North America, 32%.

However, a high proportion of short sellers does not necessarily lead to a decline in stock prices. B Riley Financial, which had the highest proportion of short sellers during this period, saw its stock price rise by 6.4% in the first week of this year alone. This is the result of expectations that the profitability of small banks may improve as the overall extent of the U.S. economic recession appears to be mild. In addition, the recent consensus that the Federal Reserve’s interest rate cut may be delayed later than expected by the market seems to have had an impact on the stock price recovery.

Beyond Meat stock price trend since listing in May 2019/Source=Google Finance

In the shaky alternative meat industry, is there a chance that ‘Beyond Meat’ stock price will fall further in the future?

Among stocks with a high proportion of short sales by Wall Street hedge funds, the stock whose stock price has fallen the most recently is Beyond Meat, a plant-based meat substitute company. Beyond Meat, which became the first alternative meat company to be listed on the New York Stock Exchange in May 2019, sparked an alternative meat trend in the U.S. food market with its stock price soaring up to 5 times the public offering price at one point, but as skepticism about its growth potential spread, its stock price is currently at its peak. It fell by about 10%.

Skepticism about Beyond Meat is not simply due to the poor performance of individual companies due to the prospect of a future economic recession. Rather, it has a greater impact on expanding skepticism about the entire plant-based meat and vegetarian trend, which has been attracting attention in the eco-friendly and well-being atmosphere. Alternative meat, which was recently seen as an alternative to overcome the climate crisis and food shortage, is facing criticism as ‘greenwashing (disguised environmentalism)’ in which it is not confirmed that it actually reduces carbon emissions. An official from the Alternative Meat Research Institute at the University of California, Berkeley, said in an interview with the BBC, “It takes an enormous amount of electrical energy to cultivate the same amount of alternative meat in a laboratory as regular meat produced by livestock farms. This means that alternative meat emits more carbon dioxide than regular meat.” He pointed out, “This is at least 4 times more emissions and up to 25 times more.”

Opposition to the alternative meat industry’s claims that it is beneficial to the human body is also rising. The Washington Post (WP) said, “The list of ingredients on the packaging of meat substitutes is excessively long,” and “We confirmed a list of chemicals I had never heard of in my life and extremely high levels of saturated fat and sodium.” Australian media outlet The Conversation also pointed out that “numerous additives are needed to achieve the taste, texture, and appearance of meat without meat.”

Eventually, these doubts about alternative meat began to be reflected in legislation in countries around the world. In November last year, the Italian House of Representatives passed the ‘Substitute Meat Ban Act’, which aims to ban the production, sale, import, and export of alternative meat and impose fines of up to 11 euros (approximately 6 million won) for violations. The United States, which approved the commercial sale of alternative meat in 8,600, also proposed the ‘Real Meat Act’ in October last year, requiring the word ‘imitation’ to appear on the packaging of alternative meat. U.S. Senator Deb Fisher (Republican, Nebraska), who sponsored the bill, said, “We must end the deceptive practices that intentionally confuse consumers by imitating beef and pork,” and added, “People should not know what ingredients they are eating for dinner. “I have the right to know,” he argued.

Similar Posts