The Square Inc. short squeeze is “losing steam,” according to financial technology and analytics firm S3 Partners.
Square SQ, +1.62% has been a “classic short squeeze” amid the stock’s meteoric rise, but S3 analyst Ihor Dusaniwsky said that he’s lately been seeing strong conviction among short sellers.
“Total borrowed stock rose to over $2.3 billion over the course of this past month as short sellers stopped buying to cover their short exposure and rode out the rally,” he wrote in a recent report. “The remaining shorts are betting a lot that they will eventually be proven right.”
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Dusaniwsky notes that Square shorts have picked up $1.7 billion in mark-to-market losses so far this in 2018, as shares of the financial-technology company have soared almost 150%.
Interestingly, Square isn’t even the most shorted stock in the fintech universe. That honor belongs to Visa Inc. V, -0.90% Dusaniwsky wrote, though Square places second.
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Earlier in 2018, Square’s stock rose partly on optimism for the company’s bitcoin-trading capacities, which were made available to users of the Square Cash peer-to-peer money-transfer service. Square has since proven that it hardly makes any money off of the bitcoin BTCUSD, -4.60% part of the business, but Chief Executive Jack Dorsey is a fan of blockchain in a broad sense and the company may look for other ways to incorporate cryptocurrencies or blockchain more broadly.
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Meanwhile, Square has been making progress with a number of its more traditional initiatives. The company is seeing continued success as it tries to onboard larger sellers and it’s benefitting from increasing adoption of high-margin, incremental services such as payroll, lending, an instant access to funds.
