Aterian (ATER) Shorts Are Now in the Red for 2021 as Culper Research’s Short Attack Fizzles, but Don’t Count the Bears Out Just Yet
Aterian (NASDAQ:ATER), the company that provides a large variety of consumer tech products ranging from home and kitchen appliances to consumer electronics, had found itself in murky waters earlier in May as Culper Research published a scathing short report. Since then, however, the company’s prospects seem to have reversed on the back of a massive short squeeze championed by retail investors.
To wit, Aterian shares are now up around 200 percent over the past month. However, the recent bullish strength in Aterian shares seems to be moderating, with the stock down around 40 percent since the 13th of September. Moreover, the stock is down another 7 percent in today’s pre-market session. With the bulls and the bears engaged in a high-stakes tug-of-war, the stock’s long-term prospects remain anything but certain.
As a refresher, Culper Research had noted back in May that one of the founders of Aterian, Maximus Yaney, was a felon who had spent 18 months in jail for wire and bank fraud. Moreover, the research firm believes that Aterian’s top-line growth remains unsustainable due to the shortcomings of its AI-driven e-commerce engine, AIMEE. The platform has remained in the pilot stage since 2018 and, according to the characterization of former Aterian employees, is not very capable. Finally, Culper Research pointed out that Aterian has launched 69 products since Q1 2019, and not a single product has reached its self-characterized “milk” stage, where Aterian would be able to leverage its pricing power to drive profits.
For its part, Aterian continues to assert that Culper Research’s report was misleading and “an attempt by a short seller to negatively impact and manipulate Aterian’s share price solely for its own benefit.” Moreover, the company recently launched a shareholders’ perks scheme that aims to provide its shareholders “exclusive benefits, discounts and early access to new products.” This scheme seems to have played some role in generating hype over social media that then translated into an epic short squeeze over the past month or so.
This brings us to the crux of the matter. According to the tabulation by S3 Partners, Aterian shorts are now in the red for 2021 by $28 million.
$ATER short interest is $93M
7.91M shares shorted
33.50 % SI% of Float
25.10 % S3 SI% Float
51.07 % fee
Shares shorted up +882K shs, worth $10M, 12.55 %, over the last week.
Shorts down -$28M in 2021 mark-to-market losses;
including -$54M on today's +37.63 % move. pic.twitter.com/REqFXSIF1X
— Ihor Dusaniwsky (@ihors3) September 13, 2021
Nonetheless, the ongoing weakness in Aterian shares might render this milestone an effervescent development. Moreover, the company’s short interest also keeps increasing, now computed at 33.5 percent of the entire float.
So, what does the future hold for Aterian bulls? Well, the situation remains quite sticky. The company’s Q2 2021 revenue increased by 14 percent on an annual basis to $68.19 million. Similarly, the gross profit also jumped by 18.6 percent year-over-year. However, Aterian’s net loss registered a whopping 1,136.2 percent annual increase during the quarter. Nonetheless, adjusted or non-GAAP EBITDA decreased to a much more manageable loss of $3.7 million compared to a gain of $3.4 million in Q2 2020. The company’s upcoming Q3 2021 earnings would afford investors some much-needed clarity. Until then, the battle between the bulls and the bears rages on.