Apple beats Tesla as the most-shorted stock in the U.S.

U.S. smartphone maker and the world’s largest publicly traded company, Apple, has overtaken electric car giant Tesla as the most-shorted stock in the U.S. According to data released by S3 Partners, Apple now holds $18.44 billion in short positions, compared to Tesla’s $17.44 billion.

Tesla has held the position of the most shorted stock since April 2020, and Apple’s overtaking is currently considered a bad omen, especially among the tech giant’s investors.

“Tesla has held the top spot on the short interest leaderboards for 864 days, or nearly two and a half years since April 2020, but Apple recently took the crown“, commented Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners in a report.

While the outlook looks bearish, Apple investors may not have to worry as much about the new designation, given Tesla’s performance in the two years it has held the rank. The auto giant has increased its valuation by 100% on an annualized basis, compared to 15% for the S&P 500.

Apple has a high growth rate when its product line and revenue generation are factored into its overall business outlook. While it is unclear what is driving short sellers to maintain a bearish bet on Apple, the company’s innovations and sustained market share are advantages that will allow it to outweigh the negatives surrounding it.

According to Ihor of S3 Partner, “while short interest shows us the dollars at risk, it does not show us the short-term trading activity that directly affects the price of a stock.“

This means that the company’s stock gains are affecting current bets against it. Over the past three months, Apple has accumulated a 17% gain and has outpaced the year-to-date growth of most indices.

Apple stock: stock growth may fuel short interest valuation

While the total price of Apple shares sold short is currently pegged at $18.44 billion, this valuation may increase over time, depending on whether or not the shares sold short are. If the shares sold short remain static and Apple’s price increases over time, we will see the price increase beyond the current level.

“Increases or decreases in short interest are a function of the increase or decrease in shares sold short and the change in the price of a share“, he said. “Therefore, if the shares sold short remain stable but the price of a stock increases, the short interest increases – but in the absence of short trading in the stock, short selling, or short hedging, the change in short interest has no effect on whether the price of the underlying stock goes up or down.“

This is often the case with shorting stocks and without significant impact on the future performance of the stock of the company in question.