Short sellers are likely ready to cover their losing positions
Short sellers seem to have made a major mistake by picking on Planet Fitness Inc. (NYSE:PLNT). The stock earlier this week touched a record high of $38.32 after the company once again blew away analysts' estimates in the earnings booth, posting a top- and bottom-line beat, with same-store sales growth increasing year-over-year. And just for good measure, the fitness chain issued a 2018 outlook that was way above expectations.
PLNT shares jumped 12.2% in the subsequent session, and this follows a 17.4% post-earnings surge back in November. Looking back further, the equity has rallied from below $12 two years ago to its current perch of $37.53, only closing one quarter in the red during that time.
Despite the fantastic fundamental and technical performance, short sellers control 9.2% of the security's float, which equates to 6.3 days' worth of buying power, based on average daily volumes. And this is even after a multi-month period of short covering that began back in September. In fact, data from Schaeffer's Senior Quantitative Analyst Rocky White shows short interest remains 47% higher from where it was last year.
It's likely many Planet Fitness short sellers are facing large losses and could be feeling the pressure to cover -- especially after another huge quarter from the company. Consider PLNT stock a strong candidate for a prolonged short-squeeze event.