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.
It has been a lucrative few days for investors betting on the demise of the grocery industry as we know it.
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.
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.