Shorts prevail as the Medical Properties Trust (MPW) stock sinks

By:
on Apr 3, 2024
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  • Medical Properties Trust’s stock is down by almost 15% this year.
  • The biggest issue is that Steward, its biggest tenant, is going through a rough patch.
  • Steward is in a deal to sell its doctor network to Optum.

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Medical Properties Trust (NYSE: MPW) stock price is still struggling this year, helping short sellers who believe that it has more downside to go. It has retreated by almost 15% this year and by 48% in the past 12 months. That means that the company has severely underperformed major American indices like the S&P 500 and Nasdaq 100 indices.

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The Medical Properties Trust crash has benefited its short-sellers. Data shows that it is the second most-shorted Real Estate Investment Trust (REIT) after Arbor Realty Trust. It has a short interest of 33.50%, meaning that many investors believe that the company has more downside to go.

The main reason why MPW stock price has collapsed is that Steward, its biggest tenant is facing a liquidity crisis. As a result, some analysts believe that the company will ultimately file for bankruptcy in the coming months.

Steward has made some progress as it works to solve its financial crisis. Last week, the firm said that it would sell its physician network to Optum Care, a company owned by United Health Care. Terms of the deal were not mentioned but MPW has said that a sale would help Steward to clear its outstanding rent.

Still, there is a lot of unknown about the deal. For example, it is unclear the amount of money that Steward will receive and whether the deal will receive the necessary approvals within the 30 days. As the biggest insurance company in the US, everything United does is under scrutiny from the Biden administration.

In the longer term, Medical Properties Trust faces more challenges. The biggest one is that it has some major maturities in the next few years. It has enough funds to cover this year’s maturities. In 2025, it faces $1.4 billion in maturities followed by a whopping $3 billion in 2026. 

Still, despite these challenges, the next few weeks will be crucial for MPW stock. The approval for the Steward and UnitedHealth deal will likely push the stock higher than it is today. This is the likely scenario. On the other hand, the stock will nosedive if the deal fails to go through.

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