Why are so many investors shorting the Metro Bank share price?

The challenger bank recorded a £2.2 million loss in its third quarter, with analysts mixed about its share price trajectory amid a challenging environment for British lenders.

Metro Bank recorded a £2.2 million in its third quarter, reflecting a challenging nine months for lender that saw an accounting error at the beginning of the year rock investor confidence and send its share price tumbling more than 85%.

However, despite the bank wrestling with a myriad of headwinds, the bank has made progress in reducing costs, strengthening its balance sheet and bringing in more customers, helping to send its shares higher in the wake of its Q3 results.

Metro Bank sees influx of new customers

In its third quarter, Metro Bank opened 106,000 new accounts – bringing its total to 1.9 million – helping total deposits to rise from £528 million to £14.2 billion over in the three months to September 30.

‘Despite considerable headwinds, we have made strong progress in reducing costs, increasing fee income and further strengthening our capital and liquidity position whilst also retaining our top position for overall quality of service for personal current account holders,’ Metro Bank CEO Craig Donaldson said.

Looking to trade Metro Bank and other UK stocks? Open a live or demo account

Fund managers increase short positions against Metro Bank

Over the last four weeks, ENA Investment Capital and Marshall Wace have raised their short positions against Metro Bank by 0.10% to 2.62% and 0.11% to 2.04% respectively.

Odey Asset Management holds the largest short position against the challenger bank at 3.65%, with five fund managers holding a combined short holding of 10.22%.

You can go long or short Metro Bank with IG using derivatives like CFDs.

Analysts mixed about Metro Bank’s share price

RBC reiterated its ‘sector performer’ rating for the stock in October and issued a price target of 370p a share – the most upbeat forecast the bank received.

Barclays Capital, meanwhile, reiterated its ‘underweight’ rating and issued a price target of 150p – the lowest estimate provided by the five investment banks covering the stock.

Based on Metro Bank closing at 221p on Tuesday, analysts believe the lender has potential downside of 32% and a possible upside of 67%.

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

Seize a share opportunity today

Go long or short on thousands of international stocks.

  • Increase your market exposure with leverage
  • Get spreads from just 0.1% on major global shares
  • Trade CFDs straight into order books with direct market access

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
liveprices.javascriptrequired
liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.