Over the past year, Apple Inc. (NASDAQ:AAPL)‘s short interest — the number of shares sold by short sellers — has increased by nearly twofold. Reported by NASDAQ twice a month, the exchange’s latest data release indicates that Apple’s short interest declined slightly in the first two weeks of December on a smaller time frame.
In the first two-week period of December, with a settlement date on the 14th, short interest in Apple came in at 19.1 million shares. This figure represents close to a 7% decline from Apple’s short interest on November 30th, and an 11% drop from one month earlier.
As mentioned above, Apple Inc. (NASDAQ:AAPL)’s short interest, which was just 10.5 million shares at the same time last year, has increased significantly since last holiday season. Likewise, short sellers’ volume has been booming as well, hitting a seven-month high in the latest filing period.
While it’s easy to see that shares of the tech giant trade at ridiculously attractive valuation metrics — a PEG of 0.59 and a forward P/E below 9.0 — Apple Inc. (NASDAQ:AAPL) obviously also has its fair number of bears.
After taking this latest short interest data into consideration, the best question to ask is: should investors take it seriously?
Well for starters, Apple’s total short percentage of float (via Yahoo! Finance) is still a minuscule 2.2%, far below the traditional danger zone for most stocks, i.e. above at least 20%. Even though Apple Inc. (NASDAQ:AAPL)’s short interest has been growing of late, we still have a long way to go before the selling can have a material effect on the stock’s price.
By comparison, competitors like Google (1.7%) and Microsoft (1.4%) have a slightly less elevated short percentage of float, still far below what we’ve seen in Zynga (8.4%), Pandora (52.6%), and Netflix (26.7%).
Of these five competitors, only the latter two have a meaningful level of short interest, and of those two, Pandora may actually be a short squeeze candidate.
In Apple Inc. (NASDAQ:AAPL)’s case, this data also indicates that not many investors were shorting the stock back in late September, before its near-25% selloff.
Due to the fact that hedge funds and other investment managers are not required by the SEC to disclosure their short positions, it’s impossible to pinpoint exactly who is short Apple Inc. (NASDAQ:AAPL), but the latest data tells us that roughly $9.5 billion worth of bearish positions are being held at the moment.
Interestingly, famed short seller Jim Chanos mentioned earlier this year that he was “afraid of heights” in Apple Inc. (NASDAQ:AAPL) when it traded in the upper 600s, but didn’t say anything about actually being short on the stock.
Let us know your thoughts on Apple in the comments section below, and if you could’ve seen yourself shorting the stock before its latest selloff. Be honest.
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