It has been a lucrative few days for investors betting on the demise of the grocery industry as we know it.
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Traders betting against grocers are making a killing thanks to Jeff Bezos
Short sellers on grocery stocks have made roughly $500 million from share weakness in Kroger, Target, and Walmart since Amazon's acquisition of Whole Foods.
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The ever-expanding juggernaut Amazon's $13.7 billion deal to acquire Whole Foods spurred share losses in the likes of Kroger, Target, and Walmart, amounting to about $500 million of gains for short speculators last week alone, according to data compiled by the financial analytics firm S3 Partners.
The short-seller profits reaped from the rubble of Kroger's stock price were particularly outsize compared with the size of the company's overall short interest.
The grocery chain has just $650 million held short, compared with roughly $2 billion for both Target and Walmart, according to S3 data. Still, Kroger was the second-most-profitable bearish bet in the whole market as its stock price plunged by 28%. Target and Walmart provided the fourth- and fifth-biggest short returns, respectively.
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Now that the organic grocer Whole Foods is under the Amazon umbrella, analysts are expecting the tech titan to further squeeze margins in an industry that already has razor-thin profitability thresholds.
While less diversified retailers like Kroger are seen taking the biggest hit, companies like Target — which gets roughly 20% of sales from grocery — are also seen coming under pressure in a retail environment that is already showing signs of decay.
That's not to say all short sellers had such a fruitful week. Those betting against Whole Foods took it on the chin as the stock surged by 19%, resulting in a nearly $200 million weekly loss.
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