Apple's Short Interest More Than Doubles

Even though the number of shares short in Apple Inc. (NASDAQ: AAPL) is more than double its total compared with the same period last year, short interest in Apple stock declined by about 4% in the two-week period between January 29 and February 12.

As of the latest short interest settlement date, about 88.3 million shares of Apple stock were short, about 0.5% of the company’s total float. A year ago, about 41 million shares of Apple were short. The days-to-cover figure remains at two.

Shorting Apple stock was not a moneymaker in 2020, but short sellers who timed the market correctly and shorted Apple between, say January 20 and January 27, when the company reported quarterly earnings, could have made a bundle. On January 26, the stock traded up about 7.9% for the year to date. By February 12, shares were up just 2.2%, and as of Wednesday’s close, Apple stock traded down about 5.4% for the year to date.

After a jump in short interest during the first two weeks of this year, when short sales totaled nearly 100 million shares, short interest has dropped more than 10%.

The tech sector, as a whole, reached a recent high on February 12. Since then, the sector index has dropped by more than 25%. Apple stock has dropped about 7.4% since then. In the two-week short interest reporting period ended February 12, Apple stock actually added 0.5% to its share price.

Exactly why the tech sector has taken such a beating over the past two weeks is burning up a lot of pixels. Rising bond rates have attracted some investors and trader rotation out of equities and into bonds. The rate on U.S. 10-year Treasuries has risen by more than 0.5% as of Thursday morning to around 1.46%. Some investors are concerned about rising inflation, but Fed Chair Jerome Powell has said the central bank will not raise rates until inflation exceeds 2%, a level that may be three years away.

Since Apple reported first-quarter earnings, most analysts have maintained a Buy rating on the stock, with a few Hold ratings mixed in. Price targets were either reiterated or raised, and the consensus target is currently $151.75, implying a potential gain of 21% to Wednesday’s closing price of $125.35. At the high price target of $175, the potential upside on the stock over the next 12 months is nearly 40%.

Apple stock dipped by about 0.4% Wednesday and traded down about the same percentage early Thursday. The stock’s 52-week range is $53.15 to $145.09, and the consensus price target was unchanged over the past two weeks.