Assessing Short Opportunities: 2 Stocks to Watch Closely

December 15, 8:00 am

Investors are constantly on the lookout for opportunities that could yield substantial returns. Sometimes, this involves seeking stocks to short, betting against companies that are poised for a downturn. By examining not just financial statements but also alternative data insights, we can unearth indicators that might provide an early warning of a company's decline. Today, let's assess two stocks that appear ripe for shorting based on a combination of financial performance and alternative data trends.

Fox Factory Holding (FOXF)

Despite a recent uptick, Fox Factory Holding has seen a 2.1% increase in its share price to $30.67, alternative data points to some potentially troubling undercurrents. Long-term decreases in social media following across Twitter and Instagram hint at waning brand recognition or consumer engagement. This trend is coupled with a decline in job posts indicating possibly stagnated growth or cost management challenges.

Perhaps more telling are internal company metrics, with reports of reduced employee satisfaction and business outlook. Such internal disenchantment can often manifest as declining productivity or innovation, ultimately impacting financial results. Moreover, a drop in web traffic and Facebook fans might signal a broader loss of interest from Fox Factory Holding's customer base, potentially leading to softer demand for its products.

Nikola Corporation (NKLA)

For Nikola, the storm clouds seem even more ominous. The electric vehicle maker has been on a downward slope, falling 11.2% to a current price of just $1.61 per share. The adoption of sustainable transport solutions notwithstanding, Nikola hasn't been able to captivate investors or consumers as evident from the decreased activity across social media platforms and a notable decline in web traffic.

More concerning is the plummeting sentiment on stock forums which often act as a crude barometer for retail investor interest. When compounded with a low business outlook among employees, it suggests a workforce that may lack motivation or confidence in the company's direction. For short sellers, these signs might paint Nikola as an attractive target.

In summary, while no single piece of data should be the be-all and end-all in investment decisions, a holistic picture painted by alternative data suggests that both Fox Factory Holding and Nikola Corporation present potential short-selling opportunities. As their narratives unfold, investors should proceed with caution and keep abreast of further developments that might affect these companies' stock trajectories.

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