According to the latest stock data, investors are looking at MercadoLibre, Inc. (NASDAQ:MELI)’s short data and trying to figure out market sentiment on which way the market thinks the stock is moving. The firm has 6.83% of total shares float short, yielding a short ratio of 4.15.
When doing stock research, there is plenty of easily measureable data regarding publically traded companies. There is also plenty of information that is not easily measured such as competitive advantage, quality of staff, and company reputation. Because there are forces such as the human element that come into play when selecting stocks, prices may not always move as expected. Even after crunching all the numbers and digging deep into a specific company, the stock’s performance still might not match expectations. Investors may realize that sometimes perception can be more powerful than reality. Human emotions can change very rapidly, and so can the prevailing market sentiment as well.
When investors engage in short selling or “shorting a stock”, they actually borrow shares from an existing owner, sell the borrowed shares at market price, and take the cash. The short sellers then promise to replace the stock in the future and makes dividend payments out of their own pockets to cover the dividend income that is no longer exists on the original, now borrowed and sold, shares.
They hope that the stock price will fall or that the company will fail and go bankrupt, leading the equity holders to ruin. The short sellers will then buy the stock back at a much lower price and replace the borrowed shares, pocketing the difference.
Let’s take a look at how the stock has been performing recently. Over the past twelve months, MercadoLibre, Inc. (NASDAQ:MELI)’s stock was 17.79%. Over the last week of the month, it was 9.39%, 8.11% over the last quarter, and 8.46% for the past six months.
Over the past 50 days, MercadoLibre, Inc. stock’s -7.97% off of the high and 33.95% removed from the low. Their 52-Week High and Low are noted here. -17.46% away from the high and 33.95% from the low.
The consensus analysts recommendation at this point stands at 2.30 on MercadoLibre, Inc. (NASDAQ:MELI). This is based on a 1-5 scale where 1 indicates a Strong Buy and 5 a Strong Sell. The same analysts are predicting that the company shares will trade to $375.57 within the next 12-18 months.
Investors might be looking at portfolio performance for the year and celebrating some big winners. Knowing the proper time to sell big winners can be just as important as knowing when to trim losses and cut out the losers. Investors may have become attached to a certain winning stock that nobody else seemed to notice. Holding on to a winner based on some type of emotion may end up hurting the portfolio down the line. Periodically reviewing the portfolio and tweaking the balance may be necessary to help maintain profits over the next year. Maybe there are some new names that seem poised to make a jump. Taking some profits from previous winners might help provide a boost of confidence to help the investor pull off the next big trade.
Disclaimer: The views, opinions, and information expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any company stakeholders, financial professionals, or analysts. Examples of analysis performed within this article are only examples. They should not be utilized to make stock portfolio or financial decisions as they are based only on limited and open source information. Assumptions made within the analysis are not reflective of the position of any analysts or financial professionals.
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