3 Compelling Stocks to Consider Shorting Right Now

June 15, 8:00 am

In an ever-evolving market, investors are always on the lookout for potential moves to protect their portfolios or take advantage of emerging trends. A particularly intriguing strategy involves short selling – betting on stocks that are poised for a decline. With an acute focus on alternative data insights, often considered the canary in the stock market coal mine, let's delve into three stocks that show concerning signs and why they may be strong candidates for short selling.

BuzzFeed Inc. (BZFD): Digital Downtrend

Once a trailblazer in digital media, BuzzFeed has hit a rough patch. The company's shares have tumbled 7.1% and are trading at a meager $2.41. The negative sentiment is reflected in various forms of alternative data: a persistent drop in social media followings across Twitter and Instagram, flagging mobile app downloads, and a worrying decline in web traffic. The internal atmosphere seems to mirror this downtrend, with a dismal business outlook from its workforce and disturbing actions from insiders who are selling their shares. A year-over-year revenue drop coupled with diminished Facebook fans further bolsters the short thesis.

Kirkland's (KIRK): Home Decor Headwinds

Kirkland's, a specialty retailer of home decor in the United States, has seen its stock price diminish by 3.2%, now at $1.90 per share. Alternative data sets the alarm bells ringing even louder with a sustained decrease in social media presence. The company's reluctance to expand its workforce evident through reduced job posts signals potential operational scaling back. Further contributing to the concerns is the gradual reduction in web traffic, signifying a loss of consumer interest—and by extension—sales, which is validated by the year-over-year revenue decline. A decrease in Facebook popularity also raises a flag about the company’s market engagement.

ContextLogic Inc. (WISH): Waning Wishes

Retail platform ContextLogic, known for its e-commerce app Wish, is facing a 6.7% drop in its stock, currently priced at $5.50 per share. Trouble seems to be mounting with falling numbers of Twitter and Instagram followers indicating a waning brand appeal. App downloads are plunging, signaling a slump in user growth and engagement—a critical metric for tech-based retail companies. Employee sentiment echoes these external indicators, hinting at rocky roads ahead. Meanwhile, insiders’ selling activities align with a concept in behavioral finance known as "smart money" moves, which can often precede broader market awareness of impending decline. Finally, dipping monthly Facebook fans and year-over-year revenue confirm the distressing trend.

As market dynamics shift, the foresight offered by alternative data becomes invaluable. BuzzFeed, Kirkland's, and ContextLogic display several red flags that suggest their stocks are primed for a fall, making them potential short-sale candidates. Investors should nonetheless pursue further due diligence, blending alternative insights with traditional analysis to substantiate any investment decisions.

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