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FinanceShort Sellers

The companies whose stocks are being swept up in the r/WallStreetBets whirlwind

Phil Wahba
By
Phil Wahba
Phil Wahba
Senior Writer
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Phil Wahba
By
Phil Wahba
Phil Wahba
Senior Writer
Down Arrow Button Icon
January 27, 2021, 3:09 PM ET
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It isn’t just GameStop anymore.

Movie theatre operator AMC Entertainment Holdings, sweets maker Tootsie Roll Industries, headphone maker Koss, home goods retailer Bed Bath & Beyond, and even mall clothing store staple Express have seen their stocks swept up this week in extreme stock market volatility as participants on Reddit message board, WallStreetBets, pour into heavily shorted stocks in their feud with hedge funds.

A so-called short squeeze is caused when short sellers—who bet a stock’s price will fall and sell shares they borrowed—have to buy shares in order to exit their positions, pushing the stock upwards. (Melvin Capital, a hedge fund targeted by members of the Reddit group, threw in the towel on Wednesday and closed its GameStop position.)

Short squeezes, typically triggered by an event such as a rosy earnings forecast or other financial news, have been breathtaking so far. On Wednesday morning, GameStop, a middling, money losing video game chain, had a market capitalization on $25 billion, similar to that of Best Buy, a far larger, better run and profitable retailer.

AMC, reeling from months of closures and low movie attendance, is worth five times what it was at the start of the pandemic. And Tootsie Roll’s stock hit an all time high of $58.30 early Wednesday. Even Blockbuster’s liquidation company, listed on the over-the-counter markets, was up 140%, after rising nine-fold on Tuesday.

Even though it’s clear all this movement in the stocks is divorced from each company’s fundamentals, here are some basic facts about some of the most traded, volatile stocks in this WallStreetBets vs shorting hedge funds saga.

GameStop

The video game retailer has struggled in recent years as more consumers buy games online and avoid its dated stores. The money-losing company has permanently closed many locations this year in addition to many being shut because of the pandemic. But GameStop posted relatively decent holiday season results, buoying sentiment in the company. And with 140% of its shares held short, its stock is particularly ripe for volatility.
Stock price range since Friday’s close: $64.85-$380
Revenue in first three quarters of fiscal year: $2.97 billion, down 31%.
Net loss fiscal year to date: $300 million in first three quarters.
Recent news: Its holiday season sales were down only 3%, a vast improvement over the first part of the year, while e-commerce sales quadrupled and now make up one-third of sales.

AMC Entertainment Holdings

Being in the movie business was brutal in 2020, with Hollywood delaying many releases and many theaters closed for months on end, raising concerns longer term for the industry as moviegoers got even more used to streaming. AMC, the world’s largest movie-theater chain, spent much of 2020 fending of creditors pushing for it to seek bankruptcy protection. But on Monday, the company got a $917 million shot in the arm, and its CEO Adam Aron said moviegoing will return, setting the stage for the insane run-up this week.
Stock price range since Friday’s close: $3.52-$15.40
Revenue first three quarters: $1.08 billion, down 73.2%
Adjusted EBITDA (loss): $671.7 million

Express

Like other mall-based clothing retailers, Express has taken a big beating from the pandemic. Consumers are buying fewer clothes for the office or special occasions, and gravitating towards items like yoga wear and pajamas as they work from home. Some of Express’ peers, like Ann Taylor’s parent company, ended up in bankruptcy because of those pressure. Express remains in a tenuous situation with no end to the pandemic in site, but with new financing, it is out of immediate danger.
Stock price range since Friday’s close: $1.79-$13.97
Revenue first three quarters: $778 million, down 45%
Net loss: $352.2 million

Koss Corporation

The headphones maker is a tiny company compared to others seeing their shares go up and down like out of control yo-yos this week. In its last fiscal year ended on June 30, sales came in just under $18.3 million, down 16% over the previous year. Yet despite its size, it’s not afraid to take on biggest companies: last summer it sued Apple and Bose for patent infringement. But it remains vulnerable to retail’s overall doldrums. But in the first fiscal quarter, Koss returned to profit even as sales edged down again, albeit more slowly.
Stock range since Friday’s close: $3.33-$37.50
Revenue first fiscal quarter: $5.2 million, down 3.7%
Net income: $127,000

Tootsie Roll Industries

Judging from many reactions Twitter to Tootise Roll’s stock moves this week, many people didn’t realize Tootsie is a publicly traded company. Indeed it is, one that takes in about half a billion dollars a year in sales, and whose portfolio includes many products well beyond its namesake oblong chewy chocolate treat. Alas for the company, COVID-19 has meant fewer parties, and of course a dampened Halloween. But it is profitable and its market cap is $3.5 billion, comparable to Macy’s before that company’s stock run up this week.
Stock range since Friday’s close: $30.15-$58.98
Revenue first three fiscal quarters: $339.6 million, down 13%
Net income: $44 million.

Bed Bath & Beyond

The home goods retailer has been making big strides in improving its financial performance. As detailed by Fortune in November, the retailer is focusing on its namesake chain, while selling off some of its weaker ones, remodeling stores and overhauling its merchandise assortment, to good effect so far. In its most recent quarter, the Bed Bath & Beyond chain had comparable sales growth of 5%. But for the company as a whole, that metric was up 2% as some of its remaining weaker banners struggled even during a home goods boom. Yet all that was known before this recent run-up. With 60% of its shares held short, according to S3 Partners, they are subject to high volatility though perhaps not to the extent we are seeing now.
Stock range since Friday’s close: $30.19-$53.90
Revenue first three fiscal quarters: $6.6 billion, down 18%
Net loss: $159.8 million (far less than the year earlier period)

About the Author
Phil Wahba
By Phil WahbaSenior Writer
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Phil Wahba is a senior writer at Fortune primarily focused on leadership coverage, with a prior focus on retail.

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