Short Sellers Circle Shake Shack $SHAK, Fitbit $FIT, and Etsy $ETSY

A clutch of recent well-known initial public offerings have enjoyed prolific starts to their stock market careers. But short sellers are not so convinced the party will last.
Out of the U.S. IPOs over $100 million this year, Shake Shack Inc.SHAK +7.12%, Etsy Inc.ETSY +30.60% and Fitbit Inc.FIT -1.28% are among the top 15 most expensive to short, a good proxy for demand by investors, according to data from Markit.
The share price of Shake Shack, the U.S. burger chain that listed in early January, soared 119% on its first day of trading. The maker of the ShackMeister Dog became an early target of short sellers. However its share price remained strong into May and short sellers backed off a little.
Now they are back. Since mid-May, Shake Shack’s stock has slumped 45%, however it is still up 23% from its listing price. At present, 3.6% of its shares are on loan.
By comparison, the average stock out on loan in the S&P 500 (of which Shake Shack is not a component) is 2.5%, Markit says.
Of the major U.S. IPOs in 2015 Shake Shake is the most expensive firm to short sell, according to a Markit report. At present, short sellers are paying an annualized fee of 105% of the amount borrowed in order to short the stock, it says.

Etsy, the Brooklyn, N.Y.-based online marketplace for handmade and vintage goods that listed in early April, has been a steady target for short sellers. While the IPO soared 88% after a day of trading, it has since fallen 44% and is flirting around its offer price of $16. In the days after the IPO, only 1% of shares were on loan. This has steadily risen to 8%, according to Markit.
Gil Luria, an analyst at Wedbush Securities LLC, currently has a “sell” recommendation on Etsy. He thinks that Etsy is overpriced, and that revenue and the margins will come down in part driven by competition with Amazon Handmade, a rival service.
Another IPO that popped was wearable technology brand Fitbit. Listing in June 17, the company rose 48% over its first day trading, and 80% over its first week. It is currently up 139% from its offer price.
Analysts like the stock. Stifel Nicolaus, SunTrust Robinson Humphrey and Deutsche Bank AG have all nailed on “buy” ratings on the San Francisco-based company. However, shares on loan have risen to 3.7%, up from 2% in the days after listing.
Jim Duffy, an analyst at Stifel, has a “buy” recommendation on Fitbit. However, he says that part of the reason for the increase in short-selling interest could be that share prices have risen too high due to the short supply of growth venture companies and tech companies coming to market. 
Etsy and Shake Shack declined to comment. Fitbit did not reply for comment.