Once again shortsellers of French automaker Peugeot SA (EPA:UG) (OTCMKTS:PEUGY) are enjoying their one day in heaven today. Shares of the company closed down 7.6% after it revealed a $1.5 billion write-down in its earnings release on Thursday.

Peugeot

Adverse forex and decreased synergies

The write-down was attributable to forex changes in Russia and Latin America and also from lesser than expected synergies between Peugeot SA (EPA:UG) (OTCMKTS:PEUGY) and its American ally, General Motors Company (NYSE:GM). The company also said that the shared synergies from their alliance would only reach $1.2 billion by 2018, down from earlier forecasts of $2 billion by 2018.

While the earnings call was shadowed by the write-down, one good piece of news was General Motors Company (NYSE:GM)’s approval of Peugeot SA (EPA:UG) (OTCMKTS:PEUGY)’s partnership with Chinese automaker Dongfeng. General Motors holds a 7% stake in Peugeot and had indicated before that it does not look favorably upon the alliance, which caused Peugeot to tumble in the market.

General Motors approves

However this time Peugeot SA (EPA:UG) (OTCMKTS:PEUGY)said that the U.S manufacturer had given its blessing. General Motors has waived its right to reject the partnership, the statement said. Peugeot SA (EPA:UG) (OTCMKTS:PEUGY)’s agreement with Dongfeng, which has not been finalized yet, involves a $3-4 billion capital increase and a larger industrial partnership in the Asian and European markets. General Motors has intimated that it will vote its rights in favor of any such transaction that occurs between the French and Chinese companies. The possible infusion of capital into Peugeot would dilute General Motors’ existing position in the company, however the U.S company has said that it will not object to Dongfeng buying a stake in Peugeot.

Short interest in Peugeot

Short interest in Peugeot SA (EPA:UG) (OTCMKTS:PEUGY) was at 5.7% at the end of the third quarter, most negative bets have been in place since last year. Peugeot was featured in out worst performing list of European shorts, as the shares had rallied over 125% until the second week of October. However for the past month, Peugeot’s breakneck speed has slowed down and short interest has risen up.

For now D.E Shaw holds 1.5% shares of Peugeot in short bets. Crispin Odey, the  famous investor based in the U.K, has a 2.56% short position. Marshall Wace, a longtime bear, has scaled back its short bet to below 0.5% for now but has traded the bet high and low, so will likely increase it once again.

While Peugeot SA (EPA:UG) (OTCMKTS:PEUGY) and General Motors Company (NYSE:GM) have dropped their agreement to jointly develop a new type of B-segment vehicles, the two companies are still involved in pursuing two projects in Europe.

Analysts at UBS and Goldman Sachs think that Peugoet is looking at further upside from the disposal of its stake in Faurecia SA (EPA:EO) which could raise nearly €1.6 billion