Apple Short Interest Surges by Over 6 Million Shares

With a modestly positive earnings report behind them, skeptics about Apple Inc. (NASDAQ: AAPL) have increased the number of shares of the stock sold short by 6.4 million to 50.9 million, an increase of almost 15% for the period that ended July 29. None of the top 15 Nasdaq companies by short interest size had such a large increase.

Over the past month, Apple’s share price has risen 12% to $108. However, with a 3% increase this year, it has not matched the rise in the Nasdaq. Apple remains the company with the world’s largest market cap, at $586 billion.

The company’s most recent quarterly earnings were not bad. For the quarter that ended June 25:

The Company posted quarterly revenue of $42.4 billion and quarterly net income of $7.8 billion, or $1.42 per diluted share. These results compare to revenue of $49.6 billion and net income of $10.7 billion, or $1.85 per diluted share, in the year-ago quarter. Gross margin was 38 percent compared to 39.7 percent in the year-ago quarter. International sales accounted for 63 percent of the quarter’s revenue.

Guidance was light:

Apple is providing the following guidance for its fiscal 2016 fourth quarter:

  • revenue between $45.5 billion and $47.5 billion
  • gross margin between 37.5 percent and 38 percent
  • operating expenses between $6.05 billion and $6.15 billion
  • other income/(expense) of $350 million
  • tax rate of 25.5 percent

Apple’s success continues to rely on two things: China and the iPhone 7. In the past quarter, Greater China sales fell 33% to $8.8 billion. Several research firms have shown Apple’s share of the market has dropped below those of Samsung and local smartphone manufacturers.

Then there is the iPhone 7, which is expected to be released in September. Early speculation says the phone will have two cameras, no port for headphones and a dozen other features that cannot be confirmed or denied. What is almost certain is that the phone is not a revolution within the industry as earlier versions were. That leaves the Apple brand to carry success over competitors, mostly Samsung. That is not much to rely on anymore.