Short Sellers Target High-Growth Media as Telecom Giants Remain Safe Havens

The mid-February data for the communication services sector reveals a stark polarization in investor sentiment, particularly among companies with market capitalizations under $2 billion. Short sellers have concentrated their bets on interactive media and streaming platforms, while virtually ignoring international telecommunications providers. This divergence highlights a broader market trend: a flight to stability and cash flow in an era of persistent volatility, contrasted with deep skepticism toward high-growth, capital-intensive digital platforms.

At the top of the short-interest list sits Bilibili Inc. (BILI), with a short interest of 15.68%. As a prominent Chinese video-sharing platform, Bilibili represents the intersection of two major risks that short sellers are currently exploiting: the ongoing regulatory uncertainty in the Chinese tech sector and the difficult path to profitability for user-generated content platforms. Similarly, Zhihu Inc. (ZH), often described as the Quora of China, faces a 12.45% short interest. For these firms, the bearish thesis often revolves around slowing user growth and the high cost of content moderation and acquisition in a tightening economic environment.

FuboTV (FUBO) remains a perennial favorite for short sellers, coming in second with 13.91% short interest. The sports-first streaming service continues to battle the cord-cutting paradox—while more users are moving to streaming, the licensing costs for live sports remain prohibitively high, squeezing margins. Short sellers are likely betting that FuboTV will struggle to achieve sustainable free cash flow before its capital reserves dwindle, especially as it competes against tech giants like Google (YouTube TV) and Disney (Hulu/ESPN+). The inclusion of GigaCloud Technology (GCT) and Angi (ANGI) in the top five most shorted list further illustrates the market's wariness toward platform-based service models that have yet to prove long-term margin stability.

In contrast, the least shorted list is dominated by international telecommunications stalwarts. Turkcell Iletisim Hizmetleri (TKC), SK Telecom (SKM), and KT Corp (KT) all show short interest levels below 0.10%. These entities function as essential infrastructure providers in their respective markets, such as Turkey and South Korea. Their business models are characterized by steady subscription revenue, high barriers to entry, and significant dividend yields. For a short seller, these stocks offer very little downside potential to justify the cost of borrowing shares, as their valuations are typically anchored by physical assets and consistent utility-like earnings.

The presence of European giants like Orange (ORAN) and Telefónica (TEF) on the least-shorted list further underscores this trend. Despite the broader challenges in the European economy, these companies are viewed as defensive plays. Their low short interest suggests that the market sees them as fairly valued or undervalued value plays rather than targets for speculative decline. This creates a barbell effect in the communication services sector: high-risk, high-reward growth stocks at one end being heavily shorted, and low-risk, dividend-paying utilities at the other end being largely left alone.

Investors should monitor these short interest levels closely as they can serve as a contrarian indicator. For companies like Bilibili and FuboTV, such high short interest creates the potential for a short squeeze if the companies report better-than-expected earnings or announce strategic partnerships. Conversely, the near-zero short interest in the telecom sector suggests a lack of catalysts for downward movement, but also implies that these stocks may lack the volatility needed for significant short-term capital gains. As we move through the first quarter, the primary focus will remain on whether the high-growth platform companies can pivot toward profitability fast enough to force short sellers to cover their positions.