Market Flash on Unusual Machines (UMAC)

Short Selling Indicators Preceded Share Price Decline

In our latest Market Flash, we highlight how EquiLend’s data for Unusual Machines (UMAC) signaled investor skepticism ahead of a recent price drop.

Market Context

Unusual Machines (UMAC) shares fell over 17% on Monday following a $48.5 million direct offering announcement, erasing much of a 50%+ rally from the prior week. In early May, the company’s CEO publicly warned shareholders to shift their holdings away from margin accounts to restrict short selling inventory.

EquiLend’s data showed a persistent and growing appetite to borrow UMAC shares, which preceded the price correction:

Borrow Demand: Utilization has remained elevated around 90% for most of the past month, indicating consistent demand to borrow shares even as prices rose.
Borrow Quantity: Shares on loan increased by 10.4% to over 4.2 million since the last short interest report date (June 30).
Cost to Borrow: The fee for borrowing UMAC shares remains elevated at 1500 bps.

The combination of high utilization and rising borrow quantity ahead of the price drop suggests that EquiLend’s data provided an early indication of negative market sentiment.

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