Best Stocks to Short Today: Insights from Alternative Data

May 15, 8:00 am

Welcome to another edition of AltIndex, where we delve into the realms of the market through the lens of alternative data. Our readers have come to expect not just a summary of numbers and charts but a deeper dive into behavioral trends and leading indicators. Today, we will be discussing three stocks that show potential as short opportunities, based on the convergence of several worrying signals.

Shoe Carnival Inc. – Losing Its Step?

Shoe Carnival (NASDAQ: SCVL), a well-known footwear retailer, has seen a modest price increase recently, trading at $35.32 per share. But beneath the surface, alternative data paints a starker picture. A persistent decline in social media followers, from Twitter to Instagram, suggests waning consumer engagement. The retail sector thrives on strong digital presence, and this downturn could foreshadow deeper troubles. Further compounding the issue, a drop in job posts hints at potential scaling back, while decreasing app downloads could imply a loss in market share to competitors. Perhaps most troubling is the flagging morale among employees regarding future business prospects. Combined with reduced web traffic, insiders selling, and declining revenues, Shoe Carnival appears to be a compelling candidate for a short position.

Foot Locker Inc. – On Shaky Ground

Foot Locker (NYSE: FL) is another player in the footwear industry that's been facing headwinds. Recently, the stock has fallen by 6%, now at $23.84 per share. A similar pattern emerges here, with a long-term dip in social media clout and sluggish, if not shrinking, job postings. Such indicators may reflect a tepid demand for the brand and possibly an upcoming downturn in sales. Alarmingly, a downturn in sentiment across stock forums may represent the collective unease among the investor community. Coupled with a drop in both web and Facebook engagement, and overlaid by a questioning of company financials, Foot Locker is shaping up as a sound short opportunity based on alternative data.

ContextLogic Inc. – Wishing For Better Days

ContextLogic (NASDAQ: WISH), the parent company of Wish.com, stands out with its more drastic price drop of 3.2%, currently at $5.30 per share. This e-commerce platform's troubles echo those of its brick-and-mortar counterparts, with a protracted decline in both social media following and digital traction. The significant downturn in job postings may signal a contraction phase or a hiring freeze, which is rarely good news for growth prospects. When the people working at a company are pessimistic about its outlook, it often precedes a downturn in performance that the market may eventually reflect. With insiders selling and a sustained revenue decrease, ContextLogic is potentially a textbook short-sale scenario.

To our insightful investors, Shoe Carnival, Foot Locker, and ContextLogic present potentially lucrative opportunities for shorting, based on a synthesis of alternative data metrics. These signs, while not infallible, suggest that now may be the opportune time to consider a bearish stance on these stocks. As always, thorough due diligence and a balanced investment approach are prudent before taking action.

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