2023 has been a spectacular year for Archer Aviation (NYSE:ACHR) stock, as shares have risen more than 250% so far this year. At the same time, the generous gains have attracted short sellers to the electric vertical take-off and landing (eVTOL) company.
Based on the latest short interest data, there were 24.58 million shares of ACHR stock sold short with a value of $156.08 million as of Aug. 15. That’s equivalent to a short interest as a percentage of float of 17.2%, which rose higher compared to the last reading of 14.1% on July 31.
Based on ACHR stock’s average daily trading volume, the shares sold short would take 3.2 days to fully cover. Generally, a short interest above 10% is perceived as high, while a short interest above 20% is viewed as very high.
ACHR Stock’s Cost to Borrow Fee Has More Than Doubled Since Aug. 18
Another factor to consider when viewing short interest data is the cost to borrow (CTB) fee. The CTB represents the annual fee that short sellers must pay in order to borrow shares to sell short. As of today, Archer’s CTB fee tallies in at 9.96%, which has more than doubled compared to the fee of 4.94% on Aug. 18. However, the fee has actually fallen lower this week, as it was 12.37% on Monday.
A high CTB fee signals high short seller demand, while a low fee signals low short seller demand. The average CTB fee for a stock ranges between 0.3% and 3%, which means that Archer’s CTB is much higher than normal but still not extremely high.
Archer’s CTB fee and short interest point to high short seller demand. Still, a high CTB fee can have the counter effect of actually helping a stock rise. This is because some short sellers may sell out of their positions by buying the underlying in an attempt to escape the high fee. It doesn’t appear as if this is the case yet.
Earlier this month, Archer announced that it had received a Special Airworthiness Certificate from the Federal Aviation Administration (FAA) for its Midnight production aircraft. The certificate will allow Archer to begin Midnight test flight operations.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
