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Beyond Meat shorts may be close to tipping point as losses mount

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Beyond Meat Inc bears are battered, but they haven't given up yet.

[SAN FRANCISCO] Beyond Meat Inc bears are battered, but they haven't given up - yet.

Short sellers have managed to dodge a short squeeze despite the stock's 35 per cent advance in the past five trading days, according to S3 Analytics. But expectations for borrow rates to resume rising could mean a capitulation is near.

"Many short sellers are getting closer to the tipping point of closing out their positions due to expensive stock borrow rates, stock loan recalls and massive mark-to-market losses," said Ihor Dusaniwsky, managing director of predictive analytics for S3.

Short sellers are paying a total of more than US$2 million a day in fees to borrow the stock, according to Dusaniwsky. While those costs have fallen as a result of a "slight" decline in short interest to 46 per cent of the float and the stock's pause on Tuesday, Mr Dusaniwsky sees higher costs in the offing.

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"Lending long shareholders must have sold into this morning's rally and momentum short sellers are pressing to get locates and sell volatility," he said. "The resulting decrease in supply and increase in demand should move BYND's stock borrow rate back over 100 per cent."