Apple replaced Tesla on Wednesday to “regain” its position as the most shorted stock on Wall Street. Tesla had held the crown since the early days of the new pneumonia outbreak.
As of Wednesday, Apple’s short sales totaled $18.4 billion, surpassing Tesla’s $17.4 billion, according to research by financial analyst firm S3 Partners. Tesla was Wall Street’s most shorted stock for 864 days since April 2020, until Apple “reclaimed” that position. Both companies had far more shares shorted than the third-ranked Microsoft, which had a short position of $11 billion as of Wednesday.
Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners, wrote in a research note that the change largely reflects short sellers cutting their exposure to Tesla, rather than making a major adjustment in their aggressive shorting of Apple.
At the same time, the recent rise in Apple’s stock price has also influenced investors to short it. Apple shares have gained a cumulative 17% over the past three months and have outperformed major stock indexes so far this year. Short sellers are taking profits by betting on a decline in the stock price.
“The increase or decrease in the total amount of shares sold short depends on the increase or decrease in the number of shares sold short and the change in the price of the stock. Thus, if the number of stocks shorted remains the same, but the price of the stock increases, the total number of shares shorted will increase. However, in cases where there is no short-selling aspect of the stock, short selling or covering, the change in the total number of shares shorted has no effect on the rise or fall in the market price of the underlying stock.” Dushansky said.
Dushansky noted that Tesla stock has also been hot over the past three months, accumulating a 37% gain, and there has been some short-covering of Tesla over the past 30 days. He also added that he has seen an increase in the number of people shorting Apple stock over the same period. If you count from the beginning of 2020, investors have done net short-covering in both Apple and Tesla stock.
