Kroger (NYSE:$KR) has seen its stock plummet by an astonishing 30% since Amazon (NASDAQ:$AMZN) announced its acquisition of Whole Foods (NASDAQ:$WFM). This hit was further increased when Amazon announced it would be cutting prices across the Whole Foods brand. This is only the latest threat from the so-called ‘Amazon effect’. However, experts warn this probably won’t be the last.
The Amazon effect is used to note the trend where companies see massive hits anytime that Amazon makes any announcement. The ability to wipe out billions of dollars of corporate market value with completely mundane announcements has created an atmosphere of fear in all their competition, from retail to brick-and-mortar stores.
S3 Partners has noted the short interest in the company – a measure of wagers that the stock price will continue to drop – has hit a record high, at 151%. S3 also notes that short sellers have benefited greatly from the drop. In the last 8 ½ months, short sellers have seen a 40.5% return on their money, with profits coming in at $289 million. Kroger is currently the most shorted company by a value of three, according to S3.
Despite the temptation to buy low, S3 warns that this trend probably won’t end anytime soon. Kroger’s float is currently only has 7.5% of their float being used.
Though the competition has affected other companies, Kroger currently sits as the hardest hit,, with it’s share price dropping by 8.3%.
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