US smartphone maker and the world’s largest publicly traded company, Apple, has overtaken electric car giant, Tesla, as the most short-sold stock in the United States. According to data released by S3 Partners, Apple now holds $18.44 billion in short positions, compared to Tesla’s $17.44 billion.
Tesla has held the position of the most short-sold stock since April 2020, and Apple’s overtaking is currently seen as a bad omen, especially among investors in the tech giant.
“Tesla has held the top spot in the short interest league tables for 864 days, nearly two and a half years since April 2020, but Apple recently retook the crown.“, commented Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners in a report.
Although the outlook looks bearish, Apple investors might not have to worry so much about this new designation, given Tesla’s performance during the two years it held the rank. The auto giant increased its valuation by 100% on an annualized basis, compared to 15% for the S&P 500.
Apple has a high growth rate when its product line and the revenue generated are considered in its overall business outlook. While it’s unclear exactly what drives short sellers to maintain a bearish bet on Apple, the company’s innovations and sustained market share are advantages that will allow it to outweigh the negative aspects that surround.
According to Ihor of S3 Partner, “while short-term interest shows us dollars at risk, it does not show us short-term trading activity that directly affects a stock’s price.”
This means that the company’s stock market gains affect current bets against it. Over the past three months, Apple has racked up a 17% gain and outpaced the growth seen by most indexes so far this year.
Apple Stock: Stock Growth May Fuel Short Interest Valuation
While the total price of Apple shares sold short is currently pegged at $18.44 billion, this valuation may increase over time, depending on whether the shares sold short are shorted or not. If the stock sold short remains static and Apple’s price increases over time, we will see the price rise beyond the current level.
“Increases or decreases in short-term interest are a function of the increase or decrease in stocks sold short and the change in price of a stock“, did he declare. “Therefore, if the stock sold short remains stable but the price of a stock increases, the short participation increases – but in the absence of short trades in the stock, short sale or hedge at short, the change in the short participation has no effect on the rise or fall of the price of the underlying stock.”
This is often the case with the short sale of shares and without significant impact on the future performance of the shares of the company in question.