Bit Brother (BETS) short sellers prevail as the stock turns worthless

By:
on Feb 20, 2024
Updated: Jun 29, 2024
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  • Bit Brother share price has dived by over 70% this year.
  • The shares have dropped by more than 99.9% in the past 12 months.
  • The company is highly shorted, with a short interest of over 75%.

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Bit Brother (BETS) stock short sellers have prevailed as the company faces delisting from the Nasdaq exchange. The stock has already plunged by more than 74% this year, making it one of the worst performers in Wall Street. And it gets worse since the shares are down by over 99.85% in the past 12 months.

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Short-sellers have won

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The biggest winners in this BETS stock implosion are the short-sellers, who have always maintained that this company was a mirage. Data by MarketWatch shows that BETS is the second most-shorted company in Wall Street after Imperial Petroleum. The company has a short interest of 72.11%, meaning that most people believe that the worst is yet to come. 

This situation accelerated earlier this month when the company received a delisting notice by Nasdaq. In addition to having an extremely low market cap, Nasdaq is concerned about the company’s market manipulation.

For example, in a recent SEC filing, the company filed for a $500 million mixed shelf, a ridiculous figure for a firm with a $1.2 million market cap. In December, the company said that it would raise $12 million through stocks and warrants. This happened a few months after it priced a $5.04 million registered direct offering.

As I have warned before, Bit Brother’s fundamentals are relatively weak. For starters, this is a company that was previously known as Urban Tea before it pivoted to Bitcoin mining and changed its name. This change happened in 2021 as cryptocurrencies were surging. As a result, the transition was part of a strategy to take advantage of the rally.

Bit Brother’s success as a Bitcoin miner has been a bit unlimited as the most recent results showed that its annual revenue came in at $2.9 million and its loss stood at over $92 million. If it continues as a going concern, there are chances that it will struggle to become profitable as the Bitcoin halving event nears.

Bit Brother

BETS chart by TradingView

What next for Bit Brother (BETS) stock price?

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Looking ahead, I suspect that the shares will remain under pressure in the coming weeks as risks of delisting remain. This means that the shares will move below $1 in the near term as its fundamentals wane.

The only risk for Bit Brother short sellers is that the company’s high-short interest means that it can still go through a short squeeze. A short squeeze is a situation where a highly-shorted stock goes parabolic as we saw with AMC and Bed Bath & Beyond a few months. 

Therefore, initiating a short position at this level is a bit risk because of this. Besides, at its peak, BETS was one of the most popular stocks in social media platforms like StockTwits and Reddit.

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