The EML Payments Ltd (ASX: EML) share price is under attack from short sellers, with the company’s short interest increasing over the last few weeks.
But why are market participants betting against the payment provider’s stock?
At the time of writing, the EML Payments share price is $2.89, 1.4% higher than its previous close.
For context, the broader market is also in the green on Friday, with the All Ordinaries Index (ASX: XAO) gaining 0.42% and the S&P/ASX 200 Index (ASX: XJO) rising 0.44%.
So, what could be driving EML Payment’s short position higher? Let’s take a look.
What’s boosting EML Payments’ short interest?
Betting against the EML Payments share price has ramped up in recent weeks, sending the company’s short position to 8.79%.
That means short sellers have borrowed and sold nearly 8.8% of the company’s stock, hoping its value will fall so it can re-purchase it at a lower price to return to the stock’s lender.
If successful, the short sellers will then pocket any falls in the EML Payments share price as a profit.
The company’s 8.8% short-selling position is significant – placing it as the ninth most shorted ASX share as of The Motley Fool Australia’s latest short-selling breakdown, published each week.
It also places the stock at its most shorted position in years. In fact, as recently as early February, the company’s short interest was tracking at around 5%.
As my colleague James Mickleboro noted, its short position could be due to concerns over the company’s valuation.
Earlier this month, Mickleboro reported EML Payments’ shares are trading at approximately 30 times the company’s estimated financial year 2022 earnings.
However, many brokers are bullish on the company’s future, despite the EML Payments share price having fallen 12% year to date.
Brokers at UBS and Ord Minnett are excited by a deal announced by the company earlier this month, which will see EML Payments entering the European employee benefits market.
EML Payments share price snapshot
The EML Payments share price has had a rough trot lately.
As mentioned above, it has slumped just over 12% so far in 2022. It has also tumbled 41% over the last 12 months, spurred by last year’s Irish disaster.
However, it’s still 88% higher than it was five years ago.
The post Why is the EML Payments (ASX:EML) share price being shorted so much lately? appeared first on The Motley Fool Australia.
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More reading
- These are the 10 most shorted ASX shares
- Has the bottom been and gone for EML (ASX:EML) shares?
- Why Ampol, EML, Vulcan, and Zip shares are zooming higher
- EML Payments (ASX:EML) share price storms higher on ‘milestone’ European deal
- These are the 10 most shorted ASX shares
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. owns and has recommended EML Payments. The Motley Fool Australia owns and has recommended EML Payments. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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