3 Compelling Stocks to Consider Shorting

July 15, 8:00 am

Investors always seek opportunities to generate profits, be it from a bull or a bear market. Alternative data has become a key tool for sophisticated investors to glean insights into a company's health before these sentiments hit the mainstream financial reports. Today, we'll discuss three stocks that might be ripe for shorting based on such data.

Kirkland's (KIRK): Declining on All Fronts

Kirkland's, despite a recent uptick of 6.8% to $1.62 per share, sends a barrage of red flags. A dwindling digital footprint marked by long-term decreases in Twitter and Instagram followers might suggest waning brand engagement. Moreover, a reduction in job postings hints at potential cost-cutting or underlying business challenges. This, aligned with reports of a bleak business outlook from employees, a dip in web traffic, and a year-over-year revenue decline, could signal deeper issues that might not yet be fully reflected in the share price.

LiveOne (LVO): Fading Presence in a Digital Sphere

LiveOne's small gain of 1.4% to $1.38 per share doesn't paint the full picture. The drumbeat of worry includes a sustained fall in social media followers and engagement, as seen on Twitter, Instagram, and Facebook. Add to this a decrease in mobile app downloads and website visitors, and it paints the picture of a company losing its audience's attention. With the media space's competitive and fast-paced nature, these losses could be early indicators of eroding market share and financial performance.

Starbucks (SBUX): A Coffee Giant Losing Steam?

Starbucks has been a household name for decades, but alternative data points to potential trouble brewing. The company's share price is down 1.2%, currently at $74.57. Beyond the typical financial metrics, which show a downtrend, Starbucks is facing a decline in digital engagement across multiple platforms, alongside shrinking job postings and app downloads. Moreover, employee outlook appears grim, and insider selling can often be a foreboding signal of waning confidence from those at the helm. A year-over-year drop in revenue combined with decreasing sentiment on stock forums could herald a period of underperformance for the coffee titan.

For investors looking for short opportunities, these stocks present cases worthy of consideration. A holistic view encompassing alternative data and traditional analysis can often reveal much about a company's trajectory before it becomes evident in quarterly results. As always, careful research and risk management are crucial when engaging in short-selling or any investment strategy.

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