Apple most shorted U.S. company, ahead of 'iPhone XS' launch

Posted:
in AAPL Investors edited September 11
S3 Partners says Apple was the most shorted company at $9.8 billion, ahead of Amazon, Tesla, and Alphabet- but it may be a function of Apple's prominence and high valuation.

Tim Cook


According to S3 Partners, as cited by the Daily Telegraph, Apple was shorted by a total of $9.8 billion as of Monday, the most of any U.S. company. Amazon was second at $9.6 billion, followed by Tesla, Alphabet, Netflix, Microsoft and Facebook.

The report comes shortly before Apple is scheduled to announce a wave of new products, including three iPhones and most likely an Apple Watch.

However, the short-selling probably should not be looked at as any kind of sign of trouble for Apple, or of any lack of confidence about the products about to be introduced.

S3 Partners


Apple's stock, despite a dip over the weekend driven by tariff comments from President Trump, remains strong. Its market cap remains over $1 trillion, and various analysts this week have raised their price targets for the company.

One thing notable about all of the the stocks on the most-shorted lists is that they're all extremely high-profile companies, they're all in the tech sector, and they all trade at huge volumes. Those stocks are certainly going to be traded -- and shorted -- at a higher volume than those of more obscure companies.

For Apple, $9.8 billion being shorted may sound like a large amount, but it's also a tiny fraction of the company's market cap, which currently stands at $1.08 trillion.

Comments

  • Reply 1 of 20
    Apple shorted? Do people want to gamble on the most valuable company? Sure it will probably go down, but they are also months from that given its fall.
  • Reply 2 of 20
    I suspect the short-sellers are going to lose some money...personally i prefer to be on the same side as Berkshire Hathaway over the long term

    I have a feeling it is going to be a blowout quarter...everyone i know is looking to buy some Apple product as a reult of the announcement tomorrow whether it is an iPhone, AppleWatch, new AirPods or an iPad.
    Soli
  • Reply 3 of 20
    Makes more sense to evaluate as a percentage of market cap rather than actual short value otherwise the most valuable companies will always be high up on the list.
    radarthekat
  • Reply 4 of 20
    lkrupplkrupp Posts: 6,440member
    Apple shorted? Do people want to gamble on the most valuable company? Sure it will probably go down, but they are also months from that given its fall.
    Well, AAPL is up almost $5 as of right now, over 2% so...
  • Reply 5 of 20
    We’ll probably hear Buffet bought another chunk of AAPL when it was pressured downward this past week.
    JanNL
  • Reply 6 of 20
    Apple may be most shorted company in dollar terms, but as a percentage of the market cap, nowhere close to the most as mentioned in the article.  I also see that Tesla's short interest would be 3 days of trades at the average volume whereas for Apple is would be 2 days for the shorts to close their positions. I never paid much attention to this but I believe that influences the extent to which short sellers would tend to drive the price up further when they try to close their positions en masse.

    The Apple shorts might not have a lack of faith in the company but rather are trying to profit on the observation that there is often a run-up in the stock and then a sell-off following announcements. With Apple near all-time highs, they might think the situation fits the model pretty well.  I've only ever bought and sold calls (and those not in a long time) so I can't really speak to how well this strategy works.
    edited September 11 urashidradarthekat
  • Reply 7 of 20
    What is their % of float shorted? that would give a clearer picture of this...
    Thats like saying Apple has more bad reviews than fitbit...obviously they will bc their user base is so large...When a more accurate picture would be what percent are unhappy
    edited September 11 randominternetpersonSpamSandwichradarthekatCarnage
  • Reply 8 of 20
    mpantonempantone Posts: 1,346member
    As of August 14, shares shorted as a percentage of float was still less than 0.9%.

    AAPL is trading above the 50-day moving average and well above the 200-day moving average. Shorting Apple short term is not such a silly concept.
    SpamSandwichradarthekat
  • Reply 9 of 20
    JanNLJanNL Posts: 246member
    We’ll probably hear Buffet bought another chunk of AAPL when it was pressured downward this past week.
    Looking at the volumes yesterday and today, it looks like it. Or Apple buying back stock.
    SpamSandwich
  • Reply 10 of 20
    Tomorrow, as always, the stock will rise during the first part of the presentation then nosedive towards the end. Happens every time.
    entropys
  • Reply 11 of 20
    entropysentropys Posts: 1,332member
    RonnnieO said:
    Tomorrow, as always, the stock will rise during the first part of the presentation then nosedive towards the end. Happens every time.
    Quite so. Buy on rumour, sell on the news. These shorters expect the usual market behaviour tomorrow.
  • Reply 12 of 20
    that is only because Tesla got hammered over the last month and all the short cleared out when the stock dropped 100 points in a few weeks.
  • Reply 13 of 20
    JWSCJWSC Posts: 225member
    badmonk said:
    I suspect the short-sellers are going to lose some money...personally i prefer to be on the same side as Berkshire Hathaway over the long term
    Consider the possibility that Berkshire Hathaway bought ‘puts’ at the same time they bought APPL shares to mitigate potential losses should share prices suffer an unforeseen steep decline in value.
  • Reply 14 of 20
    nunzynunzy Posts: 662member
    Wall Street doesn't understand Apple.
  • Reply 15 of 20
    eriamjheriamjh Posts: 1,079member
    nunzy said:
    Wall Street doesn't understand Apple.
    Not since 2001.   Apple has been doomed since Jobs came back and moreso since he died.  
    edited September 11 nunzy
  • Reply 16 of 20
    I have a feel that this years announcment is going to be very impressive and comprehensive.. And if the 6.1 is priced aggressively it will be a bomb… opening up doors for marketshare increase and expanding Apples users base.. which will bode well for services and subscriptions aswell. If im right i dont see the stock taking a hit like it normally has after product snnouncnents in recent years.
  • Reply 17 of 20
    JWSCJWSC Posts: 225member
    entropys said:
    RonnnieO said:
    Tomorrow, as always, the stock will rise during the first part of the presentation then nosedive towards the end. Happens every time.
    Quite so. Buy on rumour, sell on the news. These shorters expect the usual market behaviour tomorrow.

    Well, that’s the trick isn’t it.  If you knew what the market was going to do tomorrow (assuming the usual market behavior or whatever that means) you could play the game and win consistently.

    But with an army of traders trying to second guess everyone else, these short term trades are going to appear chaotic.  You might as well be flipping coins.  The chaos tends to dissipate when one invests on value rather than momentum, which is a fool’s game.

  • Reply 18 of 20
    k2kwk2kw Posts: 1,376member
    badmonk said:
    I suspect the short-sellers are going to lose some money...personally i prefer to be on the same side as Berkshire Hathaway over the long term

    I have a feeling it is going to be a blowout quarter...everyone i know is looking to buy some Apple product as a reult of the announcement tomorrow whether it is an iPhone, AppleWatch, new AirPods or an iPad.
    Totally agree and I think the move to 7 nm will be a blowout for phones and the AppleWatch.   The 7 nm will be great for battery life.   The new LCD based phone will get lots of sales.   I think they will also get a decent amount of sales from computer refreshes finally.   I'm not really expecting the iPadPro to be refreshed till next year.   And of course services will just keep growing.
  • Reply 19 of 20
    It's a pretty inexcusable display of ignorance (or manipulativeness) to rank short positions by value rather than by ratio. Here's the chart redrawn to show short positions relative to market cap...



    It's also useful to chart shares sold short against average daily volume, to determine now many days it would take shorts to cover their positions during a squeeze. I'll leave that as an exercise for someone else.
    edited September 11 bestkeptsecretcaladanian
  • Reply 20 of 20
    Keep in mind that there are very active markets for listed and OTC options for APPL and there is a decent level of activity in the structured notes space referencing APPL. A meaningful portion of the short interest in APPL (which, as noted, is actually quite small as a percentage of market cap) is likely option trading desks and other market makers properly hedging their exposure. Never mind the pairs and index rebalancing trades that might result in a short APPL position for reasons wholly unrelated to any fundamental belief about the trajectory of the stock in the long term. 
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