Based on the latest information, investors are looking at Yirendai Ltd. (NYSE:YRD)’s short data and trying to figure out market sentiment on which way the market thinks the stock is moving. The firm has 8.98% of total shares float short, yielding a short ratio of 4.80.
There is no shortage of financial news and opinions as we live in the age of the 24 hour news cycle. Headlines and expert opinions seem to be around every corner when dealing with the stock market. Trying to keep up with all the swirling news can make ones head spin. Even though there may be some significant news mixed in, a lot of the headlines may not be worth paying much attention to. Figuring out what information is useful may take some time for the investor to figure out. Once the filter is in place, investors may find it much easier to focus on the important data. Making investment decisions solely based on news headlines may end up causing the portfolio to suffer down the line.
When investors engage in short selling or “shorting a stock”, they actually borrow shares from an existing owner, sell the borrowed shares at market price, and take the cash. The short sellers then promise to replace the stock in the future and makes dividend payments out of their own pockets to cover the dividend income that is no longer exists on the original, now borrowed and sold, shares.
They hope that the stock price will fall or that the company will fail and go bankrupt, leading the equity holders to ruin. The short sellers will then buy the stock back at a much lower price and replace the borrowed shares, pocketing the difference.
Shorting a stock can be very risky if the price doesn’t decline like planned and, in fact, increases. It’s important for any investor to understand the dangers and potentially catastrophic financial losses of short selling.
RECENT PERFORMANCE AND RECOMMENDATION
Let’s take a look at how the stock has been performing recently. Over the past twelve months, Yirendai Ltd. (NYSE:YRD)’s stock was -61.09%. Over the last week of the month, it was -3.88%, 30.41% over the last quarter, and -45.09% for the past six months.
Over the past 50 days, Yirendai Ltd. stock’s -18.37% off of the high and 24.44% removed from the low. Their 52-Week High and Low are noted here. -64.30% away from the high and 38.10% from the low.
The consensus analysts recommendation at this point stands at 2.80 on Yirendai Ltd. (NYSE:YRD). This is based on a 1-5 scale where 1 indicates a Strong Buy and 5 a Strong Sell. The same analysts are predicting that the company shares will trade to $23.65 within the next 12-18 months.
High yielding stocks can be very tempting for investors. Trying to maximize the return on every dollar invested is a goal of many individuals. What investors have to remember is that the stocks that promise the highest return potential may also be some of the riskiest to own. Because past performance can’t guarantee future results, investors may need to do some extra research when adding high risk stocks to the portfolio. Most investors are always on the lookout to spot that next big stock winner before everyone else. Making sure that they are not adding too much extra risk when doing this may be the key to keeping the portfolio balanced
Disclaimer: The views, opinions, and information expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any company stakeholders, financial professionals, or analysts. Examples of analysis performed within this article are only examples. They should not be utilized to make stock portfolio or financial decisions as they are based only on limited and open source information. Assumptions made within the analysis are not reflective of the position of any analysts or financial professionals.