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While the total price amount of shorted Apple stock is currently pegged at $18.44 billion, this valuation may increase over time depending on whether the shorted stocks are sold short or not.
American smartphone maker and the largest publicly traded company in the world, Apple Inc (NASDAQ: AAPL) has outranked electric auto giant, Tesla Inc (NASDAQ: TSLA) as the most shorted stock in the United States. According to published data from S3 Partners, Apple now holds as much as $18.44 billion in short interests as against the $17.44 billion for Tesla.
Tesla has been holding the position of the most shorted stock since April 2020, and the outrank by Apple is currently been seen as a bad omen, especially among the tech giant’s investors.
“Tesla Inc has held the top spot in the short interest league tables for 864 days, almost two and a half years since April 2020 but Apple Inc has recently recaptured the crown,” Ihor Dusaniwsky, Managing Director of Predictive Analytics at S3 Partners commented in a research report.
While the outlook appears bearish, Apple investors may need not worry so much about the new designation considering how well Tesla performed in the two years it held the rank. The automobile giant grew its valuation by 100% on an annualized basis when compared to the 15% of the S&P 500 (INDEXSP: .INX).
Apple has a high growth track when its product line and revenue generated are factored into its general business outlook. While it is unclear what is prompting the short sellers to maintain a bearish bet on Apple, the company’s innovations and sustained market share is a benefits that will make it outshine the negativities surrounding it.
According to S3 Partner’s Ihor, “While short interest shows us dollars at risk, it does not show us the short trading activity that directly affects a stock’s price.”
This means that the company’s stock gains are affecting the current bets against it. In the past three months, Apple has accrued a 17% gain and has surpassed the growth recorded by most indexes in the year-to-date period.
Apple Stock: Share Growth May Fuel Short Interest Valuation
While the total price amount of shorted Apple stock is currently pegged at $18.44 billion, this valuation may increase over time depending on whether the shorted stocks are sold short or not. Should the shorted stock remain static and the price of Apple grows over time, we will see the price grow beyond the current level.
“Increases or decreases in short interest are a function of an increase or decrease in shares shorted and the change in a stock’s price,” he said. “Therefore, if shares shorted stay static but a stock’s price increases, its short interest increases — but with no short-side trading in the stock, short selling, or short covering, the change in short interest has no effect on the rise or fall of the underlying stock’s market price.”
This is often the case with stock shorting and with no significant impact on the future performance of the company’s shares in question.