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Research Analyst

Why is short interest in Best Buy less than its peers?

  • Like other retailers, Best Buy is sailing in murky waters given current macroeconomic conditions
  • Despite the challenges it had to endure, Best Buy remains absent from the list of most shorted stocks

What is the short interest in consumer electronics retailer Best Buy (NYSE: BBY) ahead of its second-quarter financial results on August 30? 

On the last trading day, Best Buy had roughly 12 million shares in short interest, reflecting 5.97% of its outstanding shares. By midday Aug. 19, 5.5 million Best Buy shares are available to be shorted, according to management consulting company Fintel. 

BBY stock dipped nearly 4% at close of trading Aug. 19 and had another marginal decline at the start of this week. The company’s stock was almost in the green last week, after peaking at $86.35 on Tuesday, and creating a new multi-month high. However, BBY eventually closed lower on the week thanks in part to the aforementioned 4% drop. 

NYSE: BBY, with short interest indicator 

Keeping off the most shorted list 

Despite the challenges it had to endure, Best Buy remains absent from the list of most shorted stocks.  

The list of stocks on the most-shorted list in August, include Intercept Pharmaceuticals (NASDAQ: ICPT), Bed Bath & Beyond (NASDAQ: BBBY), MicroStrategy (NASDAQ: MSTR), WeWork (NYSE: WE), Upstart (NASDAQ: UPST), and Beyond Meat (NASDAQ: BYND). All the above stocks have short interest above 35.00% of its outstanding shares. 

Best Buy's peer group average for short interest as a percentage of float is 25.57%, which means it has far less short interest than most of its peers. 

Second-quarter outlook 

Like other retailers, the company is sailing in murky waters given current macroeconomic conditions. High inflation rate, interest hikes and even energy cost could add more challenges to these companies. 

For Best Buy, some think the BBY's revenue and profitability are on-track to recovery after record-lows in the first quarter, setting the stage for a long-term rebound after bottoming in July. 

However, Best Buy, may not be so bullish in its own outlook. BBY is slated to announce second-quarter results on August 30 and it expects to report a roughly 13% decline in comparable sales and an approximately 7.5% hike in revenue compared with the pre-pandemic second quarter of fiscal-year 2022.  

Best Buy CEO Corie Barry said, "as high inflation has continued and consumer sentiment has deteriorated, customer demand within the consumer electronics industry has softened even further, leading to Q2 financial results below the expectations we shared in May." 

The company also plans to suspend share buybacks but assured the payment of quarterly dividends. 

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