ASOS targeted by 'dark destroyer' shortseller ShadowFall

An established short-seller, commonly known as the “dark destroyer”, has bet against ASOS in the belief that the online fashion retailer will need to raise more cash from shareholders.

Matthew Earl, leader of investment firm ShadowFall, has built a short position in ASOS worth approximately £4 million. Short-sellers hope to profit from falling share prices by selling shares they have borrowed and then buying them back in the future at a lower price.

ASOS is the second most shorted stock in the FTSE 250, with 10.98% of its outstanding shares on loan, according to S&P Global Market Intelligence. Major hedge funds including Citadel Advisors and Marshall Wace have also taken out substantial short positions.

In common with many in the online fashion space, ASOS enjoyed a boost in sales during the initial phase of the pandemic but has since been hit by increasing returns, falling demand and, in the lead up to peak trading last year, faced delivery disruption from postal strikes.

In the last year it has also undergone a significant shake-up of its boardroom appointing a new chairman, CEO and CFO. Former Chief Commercial Officer José Antonio Ramos Calamonte was appointed as CEO in the summer, replacing former chief Nick Beighton, who is now heading up MATCHESFASHION.com.

Total group revenue at ASOS dropped to £1.34 billion in the four months ending 31 December, which it said was in line with expectations. EU however sales grew 6%, driven by improved basket economics supported by price increases, and customer growth, with the Netherlands and Ireland notably strong, while US sales fell 2%, with slower wholesale performance acting as a drag on retail sales.

ShadowFall has also targeted ASOS's ecommerce rival Boohoo Group, cybersecurity firm Darktrace and publisher Future in recent years.