Traders are betting billions against Disney

Traders are betting billions of dollars against Disney.Reuters Pictures/Ivan Alvarado

Disney‘s stock has had a rough time lately, falling 4.4% in a single day earlier this month after CEO Bob Iger threw cold water on the company’s 2017 profit outlook.

And traders don’t look like they’ll ease up on selling any time soon.

Short interest — a measure of wagers that share prices will drop — now sits at more than $2.7 billion after surging by $696 million in the last month alone, according to data analytics firm S3 Partners. That increase was the fifth-largest out of any American company over the period.

Also adding to pressure on Disney’s stock was the company’s August 8 announcement that it will terminate its streaming agreement with Netflix in 2019. While the entertainment titan also has plans for its own streaming portal for both Disney and Marvel content — as well as an online-based ESPN network — investors have been less than convinced. They’ve sent shares 7.6% lower over the past six weeks, badly lagging an S&P 500 that’s repeatedly soared to new record highs.

If short sellers want to keep loading up on bets against Disney, they won’t be met with much resistance, S3 said. The cost to borrow shares to short is sitting right around normal levels, while there’s also “more than enough” stock available to borrow, according to the firm.

Looking at the big picture, while Disney is the biggest target for stock shorts in the movies and entertainment sector, the whole industry is feeling pressure. Short interest in the group is up $1.7 billion, or 29%, this year, S3 data show. And more than $1.1 billion of that increase has occurred in the past 30 days.

So regardless of Disney’s own fundamentals, it also looks to be a lightning rod of sorts for sentiment in its industry. Stay tuned to see if the company’s reorganization efforts pay off in the long run.

Disney is the most shorted stock in the movies and entertainment sector, but the whole industry is under pressure.S3 Partners