How You Can Tell Wall Street Really Hates Target's Stock

It might be time for Target Corp (TGT) shorts to hop back on the bandwagon. 

2018 hasn't been kind to shorts, which were down $470 million in January mark-to-market losses.

Target is the most shorted stock in the non-internet retail sector, accounting for about 10% of the overall $35.3 billion or short exposure in the sector. Short exposure in the sector has risen 3.8%, or $1.2 billion, over the past 12 months.

Target short interest exposure is currently $3.2 billion, according to data compiled by S3 Analytics, which is 25% off of its year-to-date high of $4.3 billion but is still 16% above 2017's $2.5 billion average short interest. 

On Tuesday, Target shares were down 5.48% to $71 after the company reported quarterly results that fell short of expectations. The company reported earnings of $1.37, down 5.5% from a year ago, on revenue of $22.27 billion, up 10.1% from a year ago. 

Target's troubles are tied to a $7 billion turnaround plan that is eating up the company's revenue increases. 

The company's struggles turned out to be a boon for short sellers in 2017, who were up $111.5 million in year-to-date mark-to-market profits. 

But this is a marathon, not a sprint, and with today's price movement, Target shorts have recouped more than a third of their year-to-date losses and are up $162.5 million in mark-to-market profits. Total losses now rest at nearly $302 million. 

With today's miss, S3 expects Target short interest to increase and possibly head back to the $4 billion level. Increased market share grabs from rivals Amazon Inc. (AMZN)  , an Action Alerts PLUS holding, and Walmart Inc. (WMT) could be the signal short sellers are looking for to make a run on the retailer once again. 

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