Headquartered in Oklahoma City, Chesapeake (NYSE:$CHK) is an explorer and producer of petroleum and natural gas. With declining share prices since the beginning of the year, Chesapeake’s short interest reached about 23% on July 18th, 2017.

To put into perspective, that’s almost double of the 12% ratio observed about 7 months ago in January 2017.

What is short Interest?

Short interest is a ratio that tells you the percentage of people that have not yet covered their short positions relative to a number of shares in the float.

As a market indicator, short interest grants investors a little insight into the overall market sentiment of a stock, as a higher short interest would imply that investors are more confident in the stock’s fall than rise.

Why does it matter to Chesapeake?

Investors should note that Chesapeake’s short interest has drastically risen from January 2017, while Chesapeake’s stock has dropped from ~$7.00 to just under $5.00 during the same period.

For the most part, it can be observed that Chesapeake’s stock price and short interest have a negative correlation in their movements.

As of July 18th, 2017, Chesapeake’s peers EQT (NYSE:$EQT) and Rice Energy (NYSE:$RICE) trade with short interest ratios of ~13% and ~3% respectively. From an objective point of view, Chesapeake’s interest ratio of ~23% is concernedly high, which could imply that Chesapeake is overvalued relative to its peers, and could disappoint in performance.

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