That makes it the fourth most shorted Australian stock.
But what does that actually mean? Let’s take a look at the implications of Webjet’s considerable short interest.
What does Webjet shares’ short interest mean for investors?
The Webjet share price is still under short attack, and it might be bad news for those invested in the company for growth.
To put it simply, short selling is a way for large-scale investors to profit from share price falls.
To ‘short’ a stock, a person must borrow it from another investor for a designated amount of time. The borrower then sells those loaned shares on the market.
The idea is the borrower will take the cash from selling the loaned shares and sit on it for a time.
If all goes well for the short seller (and poorly for long term investors), the share price of the borrowed stock will fall.
That will let the short seller buy the loaned shares back for less than they sold them for, before returning the stock to their owner.
The short seller can then pocket the difference as profit.
So, what is short interest? It’s how many of a company’s shares are currently involved in short selling operations.
Thus, 9.4% of Webjet’s outstanding shares are currently being wagered on its share price falling in the short to medium term.
Of course, that figure is probably worrying to many long-term investors.
Still, there’s always a chance the share price will go up and short sellers will have to fork out more than they earned to return the shares.
Interestingly, that’s what many brokers seem to expect will happen.
Goldman Sachs has a price target of $6.90 on the travel company’s stock, while Morgans has slapped it with a target of $6.60.
As of Monday’s close, the Webjet share price is $5.04, leaving the brokers predicting it has an upside of 30% to 36%.
The post Webjet (ASX:WEB) shares have a 9% short interest. What does this mean? appeared first on The Motley Fool Australia.
Should you invest $1,000 in Webjet right now?
Before you consider Webjet, you’ll want to hear this.
Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Webjet wasn’t one of them.
The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.
*Returns as of August 16th 2021
- How high will ASX travel shares fly in 2022?
- These are the 10 most shorted ASX shares
- Analysts say these ASX shares are buys
- How might the Webjet (ASX:WEB) share price perform in 2022?
- 2 buy-rated ASX travel shares that could take off
Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Webjet Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
from The Motley Fool Australia https://ift.tt/32mccF0