Ahead of the introduction of Apple Inc.’s (NASDAQ: AAPL) new smartwatch, the short interest in the company with the largest market cap in the world fell. Short sellers may believe that Apple is not a promising target. Its stock is up 16% in the past three months, and early success of the Apple Watch could drive the price even higher.
Source: courtesy of Apple Inc.
Shares sold short in Apple’s stock as of March 31 were 64.7 million, which made it the 13th most shorted stock on Nasdaq, based on total share count. The number dropped by a million shares from March 15.
Unlike with many other companies, Apple’s short interest could be covered in one trading day. By contrast, that number for failed online game maker Zynga Inc. (NASDAQ: ZNGA), which has slightly more shares sold short than Apple at 73.2 million, is five.
The relatively large short interest in Apple has to have some foundation. Among the most likely explanations is an anticipation of a failure in sales of the Apple Watch product. The other is that Apple reports earnings on April 17. Even a slight miss of analysts’ forecasts for the first quarter of the calendar year could send Apple’s shares tumbling.
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If a Reuters report on early Apple Watch sales is accurate, short sellers may wish they had exited the stock early in the month. According to the news service:
Customers preordering Apple Inc’s smartwatch on Friday will have to wait at least a month for delivery, a sign of strong early demand for company chief Tim Cook’s first new major product.
People flocked to Apple’s stores around the world to get a close-up look at the Apple Watch, the tech company’s foray into the personal luxury goods market, with Apple predicting demand would exceed supply at product launch.
iPhone buyers have often waited for hours, or even days, to buy the latest edition from Apple retail stores. That was always a sign that demand had outrun supply. Apple Watch sales, so far, appear to have the long wait for delivery in common with Apple’s most successful product.
ALSO READ: RBC’s 6 Top Tech Stocks to Buy Ahead of Earnings
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