Top 3 Stocks Poised for Short Opportunities Based on Alternative Data

August 25, 8:00 am

As investors seek to navigate the choppy waters of the stock market, alternative data insights can shine a light on underlying company performance trends that may not be immediately apparent through traditional financial metrics alone. In today's rapidly shifting economic environment, the following three stocks show potential as short candidates based on a confluence of alternative data indicators and fundamental analysis.

Lion Electric (Ticker: LEV)

With its stock price down 6.8%, currently at $0.73 per share, Lion Electric demonstrates clear signs of struggle. Alternative data points to a continuing downtrend, including a month-over-month reduction in social media following on platforms like Twitter and Instagram, coupled with declining interest in job posts. Notably, a negative shift in business outlook reported by employees could signify internal challenges. Furthermore, a worrying year-over-year revenue decrease paired with a fall in Facebook fans suggests waning popularity and consumer engagement, potentially leading to further stock price erosion.

Canoo Inc. (Ticker: GOEV)

Canoo has seen a recent 2% decline in its stock price, now at $1.50 per share. The electric vehicle company faces a slew of prolonged negative trends across social and digital presence, including a continued loss of Twitter and Instagram followers, as well as a drop in YouTube subscribers. Concurrently, a decrease in job posts and a pervasive low employee business outlook mirror deep-rooted challenges. Market sentiment on popular stock forums also reflects investor skepticism, and insider sales could be a sign of a lack of confidence in the company's near-term prospects. Combined with decreased web traffic, Canoo's stock may be primed for a short position.

ContextLogic Inc. (Ticker: WISH)

ContextLogic, trading at $5.44 per share after a 5.7% decline, is another company where alternative data predicts future headaches. A consistent decrease in social media followers across major platforms and a downturn in job posts point to declining brand and employer appeal. The company's mobile app downloads—a critical growth metric for the online shopping platform—are also waning. Employee sentiment reflects a gloomy business outlook, while revenue contraction and lessened Facebook fan engagement paint a picture of a business that might continue to underperform, potentially making it a short-sale target.

Each of these companies exemplifies the utility of alternative data in uncovering investment opportunities. Through a multitude of channels, from social media metrics to employee sentiments, savvy investors can glean insights that might precede negative price movements. While future market conditions are inherently uncertain, the case for shorting Lion Electric, Canoo, and ContextLogic appears substantiated by the convergence of adverse alternative data trends and lackluster fundamentals.

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