Wall Street is now betting against restaurant stocks because of Novo Nordisk’s Ozempic and high-interest rates

The impact of drugs aiding weight-loss, including Novo Nordisk’s Wegovy and Ozempic, are reaching far beyond healthcare. Short sellers are now doubling down on their bets against restaurant stocks—thanks to higher interest rates and weight-loss drugs which could impact consumer behavior. 

Short positions on companies such as McDonald’s, Chipotle Mexican Grill and Starbucks have seen big increases in the 30 days to Monday, Bloomberg reported, citing data from New York-based analytics firm at S3 Partners. Traders have expanded those bets by $815 million over that time period, and short interest in restaurants collectively has swelled to $12.2 billion, the company said.

“If high interest rates continue, we should see discretionary consumer spending take a hit and the restaurant sector to continue its downward price trend,” Ihor Dusaniwsky, S3’s managing director, told Bloomberg. He added that business for the restaurant industry could be hurt if more consumers resorted to GLP-1 medications such as type 2 diabetes drug Ozempic and weight-loss-targeted Wegovy, both of which curb appetite for food intake.

The possible ripple-effects of GLP-1 drugs has already begun putting pressure on restaurant stocks. For instance, the S&P 500 Restaurant Sub Industry Index has dropped about 12% in the last three months, according to MarketWatch.

S3 found that shorting restaurant industry stocks had already paid off for investors—in the past month, 97% of every dollar that was shorted had turned profitable, the firm said. 

“For now, market momentum is favoring the short side of the market,” Dusaniwsky told Bloomberg. 

S3 Partners didn’t immediately return Fortune’s request for comment.

Investors across different industries are trying to gauge how a frenzy started off by Novo’s “miracle” weight-loss drugs could impact different business areas. Last week, British bank Barclays suggested shorting fast-food credit as their products stand to lose from the growing popularity of the weight-loss industry. The U.S. CEO of the world’s biggest retailer Walmart also cautioned that the company was seeing initial signs that consumers using appetite suppressing drugs were pulling back from some food spending. 

Weight-loss drug boom

Demand for Novo-made drugs turned the company, previously known for its insulin manufacturing, into a behemoth in the pharma industry. Wegovy became a sensation among dieters, and social media and A-listers like Elon Musk helped amplify the buzz around the drugs, which can serve as a tool for safe weight-shedding. The popularity of these drugs have soared almost concurrently with a rise in food prices around the world, which has eased food sales as consumers tighten their purse strings to cope with inflation.

A rapidly growing weight-loss market helped push Danish Novo to become Europe’s most valuable company, unseating luxury conglomerate LVMH from the position.  

“We are serving more patients than ever before,” Novo CEO Lars Fruergaard Jørgensen said in a statement announcing the company’s earnings for the first six months of 2023 in August. The market for weight-loss drugs is set to reach $100 billion by 2035, according to BMO Capital Markets, cracking open a large consumer base in the coming years.

Novo didn’t immediately return Fortune‘s request for comment.

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