Technology

Apple's Short Interest Nearly Triple Year-Ago Level

The number of shares short in Apple Inc. (NASDAQ: AAPL) is nearly three times its total compared with the same period last year. Short interest in Apple stock rose by more than 7 million shares (about 7%) in the two-week period between February 26 and March 15.

As of the March 15 short interest settlement date, about 107 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. Days to cover fell from two to one in the latest period.

Shorting Apple stock in 2020 was not a winning strategy. Apple shares added 82% to their value last year. However, with the sudden and sharp downturn in tech valuations since late January, short sellers continue to do well going after tech stocks.

On January 26, the day it released its fiscal first-quarter earnings, Apple stock traded up by nearly 8% for the year to date. By February 12, shares were up just 2.2%, and as of March 15, shares were down 6.4%. Late Thursday morning, Apple stock traded down more than 9% for the year to date.

The prior two-week reporting period was 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 3.3% by Thursday as investors continue buying the dip. From a trough of around 1,337 on April 2 of last year, the S&P 500 tech sector index was nearer 2,280 Thursday morning.

U.S. 10-year Treasury note yields rose even more during the two-week short interest reporting period, gaining about 10 basis points. They’ve added less than one more basis point since then to trade Thursday morning at around 1.61%. The 10-year/two-year yield curve has dipped by 10 basis points.

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 $152.06, up by about $0.40 since late February, implying a potential gain of about 27% to Wednesday’s closing price of $120.09. At the high price target of $175, the potential upside on the stock over the next 12 months is nearly 46%.

Apple stock traded down less than 1% Thursday morning to $119.99. The stock’s 52-week trading range is $53.15 to $145.09. Apple’s $0.82 per share annual dividend represents a yield of 0.68%.