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Analyzing Delta Air Lines’ Short Interest after 4Q17

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Delta Air Lines’ short interest

As of March 15, 2018, the latest short interest data showed that Delta Air Lines’ short interest has increased since its 4Q17 earnings were announced on January 11, 2018. The bearish sentiment in the stock has increased. As of March 15, 2018, Delta Air Lines’ short interest as a percentage of outstanding shares stood at 2.6%. Delta Air Lines’ short interest increased from 2.4% as of January 12, 2018. For the same period, the stock price fell from $59.83 to $56.34.

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Why did the short interest increase?

The increase in Delta Air Lines’ short interest is due to external factors. Ongoing trade wars between the US and China regarding tariffs, fear of more federal rate hikes, and political unrest created a volatile situation in stock markets across the globe. Increased crude oil prices are a concern for Delta Air Lines. Increasing the operating costs could impact Delta Air Lines’ margins and net income.

Short interest ratios

In terms of the number of shares, Delta Air Lines’ short interest was at ~18.40 million shares. Delta Air Lines’ average trading volume is ~8.40 million shares, which means a short interest ratio of ~2.20x. The ratio indicates that it would take two days to cover all of the short positions. Below are peers’ short interest ratios.

  • American Airlines’ (AAL) short interest was 23.7 million shares. The average number of shares traded is 4.9 million shares. The short interest ratio is ~4.8x, which indicates that it will take four days to cover all of the short positions.
  • Southwest Airlines’ (LUV) short interest is at 11.1 million, while the average number of shares traded is at 5.2 million. The ratio indicates that it will take two days to cover all of the short positions.
  • JetBlue Airways’ (JBLU) short interest ratio stands at ~2.7x. The ratio indicates that it will take three days to cover all of the short positions.

Investors could hold Delta Air Lines indirectly by investing in the PowerShares Dynamic Leisure and Entertainment Portfolio (PEJ). PEJ has invested 5.2% of its portfolio in Delta Air Lines as of April 5, 2018.

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