JC Penney Short Interest Soars by 21 Million Shares

By Douglas A. McIntyre Updated Jan 12, 8:15AM EST · Published Sep 13, 6:40AM EDT

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JC Penney Short Interest Soars by 21 Million Shares — © Thinkstock

The short seller bet against J.C. Penney Co. Inc. (NYSE: JCP) grew sharply in the period that ended August 31. Shares sold short rose by 21 million to a total of 142 million, which is an extremely high 49% of the retailer’s float. A large number of investors believe that J.C. Penney will continue to have trouble surviving in an extremely crowded retail market in which it has been eaten alive by competition.

J.C. Penney shares have continued their nose dive so far this year, down 50% to $4.20, against a 52-week high of $10.74. Over the past five years, the stock has fallen 83%.

The latest round of results from traditional retailers has encouraged investors to believe that J.C. Penney cannot buck a tide that is much broader than its own results. Macy’s Inc. (NYSE: M) shares are off 38% this year to $22. Shares of Sears Holdings Corp. (NASDAQ: SHLD), the parent of Sears and Kmart, are off 25% to $7.70. There is a great deal of educated speculation that Sears cannot remain solvent and the common shareholders will be wiped out soon. Whether or not it is fair, much of Wall Street has lumped J.C. Penney in the same class.

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J.C. Penney missed earnings estimates last quarter, which only served to show that it has not pulled out of its nose dive. Amazon was blamed, which has become commonplace whenever a traditional retailer posts poor results. J.C. Penney does not have a robust online presence to serve as an anchor as store traffic drops. The company continues to tinker with what it should and should not stock in its stores. On that front, it has had no luck. Worse, its brand may have suffered so badly that many shoppers will never return.

J.C. Penney’s short interest is a reasonable evaluation of its prospects. That means it shares are headed lower.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.