Will Apple stock experience a short squeeze similar to a game stop?
The fact that Apple is the most shorted U.S. stock shouldn’t bother Apple shareholders. I’m referring to a report from the short-seller analytics firm S3 Partners that Apple AAPL had surpassed Tesla TSLA as the leader of this list after 864 days. Apple shares had a total short interest of $18.4 billion as of September 14 compared to Tesla’s $17.4 billion. The amount of money being actively staked on the decline of Apple’s stock surely appears large.
Tesla’s market-beating performance despite the fact that it was the most shorted stock may be the first indication that Apple investors should not fear.
According to FactSet, the stock had a total return of more than 100% annualised between April 2020 and September 14 compared to 15% for the S&P 500 SPX.
Investors in Apple can only hope that the company outperforms the market by a similar amount when it is being most heavily shorted.
The context of the short-interest data is necessary for its interpretation. Although Apple has the biggest market cap of any publicly traded corporation in the world, a sizeable dollar amount of its shares may be sold short. The days-to-cover ratio and short-interest percentage, which measure how many shares have been sold short relative to the total number of shares outstanding, are two of the more important short-selling metrics (the number of shares sold short divided by average recent daily trading volume).
Apple is actually among the stocks that are least shorted, based on any of these two ratios. Apple ranks 477th out of 500 stocks in the S&P 500 in terms of the short-interest ratio, according to FactSet. It comes in the 463rd place in terms of days-to-cover ratio. In other words, what the headlines claimed to be one thing is actually the exact opposite.
