Apple's Short Interest Jumps to More Than 100 Million Shares

The number of shares short in Apple Inc. (NASDAQ: AAPL) is more than double its total compared with the same period last year, and short interest in Apple stock jumped by more than 12 million shares (about 14%) in the two-week period between February 12 and February 26.

As of the latest short interest settlement date, about 100.8 million shares of Apple stock were short, which is about 0.6% of the company’s total float. A year ago, about 38.4 million shares of Apple were short. The days to cover figure remains at two.

As we noted in our last report on short interest in Apple, shorting the stock in 2020 was not a winning strategy. However, with the sudden and sharp downturn in tech valuations since late January, short sellers have done well going after tech stocks, particularly the larger ones.

On January 26, the day it released its fiscal first-quarter earnings, Apple stock traded up about 7.9% for the year to date. By February 12, shares were up just 2.2%, and as of Tuesday’s close, Apple stock traded down about 8.6% for the year to date. As of February 26, shares were down 8.5%.

The latest two-week reporting period is the first time since last July that short interest in Apple topped 100 million shares. In the past 12 months, the company’s peak level of short interest was the reporting period ending on July 15, when nearly 141 million shares were short.

The tech sector, as a whole, reached a year-to-date low on March 8 but recovered about 3.4% on Tuesday as investors had probably decided that it was time to buy the dip. From a peak of around 2,435 on the S&P 500 tech sector index, the index hit a trough of around 2,200 on Monday before settling at near 2,282 on Tuesday.

Rising bond rates rose even more during the two-week short interest reporting period, gaining 20 basis points. They’ve added another 15 or so basis points since then to trade Wednesday morning at around 1.56%.

On top of that, as growth investor Louis Navellier noted in his market commentary Tuesday:

There is undoubtedly a big stock market leadership change underway as many of the big components of the S&P 500 stumbled a bit recently, as the institutional money is now chasing more of the small-cap, mid-cap and international ADRs.

Since Apple reported first-quarter earnings, most analysts have maintained a Buy or Strong 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 just over 25% to Tuesday’s closing price of $121.08. At the high price target of $175, the potential upside on the stock over the next 12 months is nearly 45%.

Apple stock rose by more than 4% Tuesday and traded down less than 1% in premarket trading Wednesday. The stock’s 52-week range is $53.15 to $145.09, and the consensus price target was unchanged over the past two weeks.

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