If you’re wondering which communication stocks short sellers are targeting, look no further. The communications sector is a tough place to make money these days. Technological upheaval, shifting consumer tastes, and a difficult financing environment have made the industry volatile and a favorite of short sellers who capitalize when a stock declines. Well-known stocks of telecommunications, communications infrastructure, and broadcast companies have steadily declined in recent years. This has made them targets for short sellers who move in when they smell blood in the water.
While disconcerting, it is important for investors to be aware when a stock they own is attracting interest from short sellers as this can be an indication of problems with a company. Sometimes those problems can be short-term in nature. Other times they can be an indication of bigger issues that will not be easily resolved. In the end, increasing short bets against a stock reveals souring sentiment and expectations of more share price declines. Here are three communication stocks short sellers are targeting.
Communication Stocks Short Sellers Are Targeting: AT&T (T)
It’s a safe bet that short sellers are ratcheting up their bets against AT&T (NYSE:T) after the telecommunications company disclosed that millions of its customers’ data ended up on the “dark web,” a notorious corner of the Internet that can only be accessed using special software. AT&T said over the Easter weekend that it had to reset the passcodes of 7.6 million current users who were impacted by the massive data breach. Another 65 million former account holders of AT&T also had their data published on the dark web.
The company said that the leaked data is from 2019 or earlier and includes personal information such as names, home addresses, phone numbers, dates of birth, and Social Security numbers. The leaked data does not contain people’s financial information or call history. Nevertheless, AT&T is encouraging people who’ve been impacted by the data breach to set up fraud alerts and monitor their credit report closely.
The dark web employs complex systems to obscure a user’s IP address, making it difficult to track their online activities. The dark web is often used for money laundering, arms dealing, and sex trafficking, according to law enforcement agencies. T stock has declined 10% over the last 12 months and is down 28% over the past five years. About 1.35% of AT&T’s outstanding shares are sold short, a higher percentage than many of its peers.
American Tower (AMT)
American Tower (NYSE:AMT) is a Boston-based real estate investment trust (REIT) that owns, develops and operates wireless and broadcast communications infrastructure across America and in several foreign countries. AMT stock has not been a strong performer, leading to an increase in short interest of its shares. Through one quarter of the year, AMT stock is down 12%. The company’s share price is down 1% through five years.
Struggling earnings and debt taken on to expand into fifth generation (5G) wireless internet is what appears to be holding back AMT stock. The total percentage of American Tower stock that is sold short currently stands at 1%. However, short sellers have been increasing their bets against the stock this year. In February, the percentage of AMT stock short sales grew by 10% following the company’s most recent earnings print.
Sirius XM Holdings (SIRI)
Satellite radio provider Sirius XM Holdings (NASDAQ:SIRI) is one of the most shorted stocks on Wall Street right now. Currently, about 25% of the company’s shares are shorted by professional and retail investors. This as SIRI stock continues its steady decline. So far in 2024, the stock has dropped 30%. The share price peaked just before the dotcom bubble burst in 2000. It has never recovered, falling 94% over the last 24 years.
Analysts and short sellers seem to be in agreement that Sirius XM Holdings has limited growth prospects beyond being deployed in people’s vehicles. The company also faces an existential threat from thriving podcast and audio streaming companies such as Spotify Technology (NYSE:SPOT). The pessimistic outlook helps explain why SIRI stock is so popular among short sellers who see more downside ahead. Investors should be aware that this is a communication stock that short sellers are targeting.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.