Market Overview

Apple Short Interest Jumps By $1.3B Ahead Of iPhone Event

Apple Short Interest Jumps By $1.3B Ahead Of iPhone Event

On Tuesday, Apple, Inc (NASDAQ: AAPL) shares ticked lower by about 0.5% after the stock gained 6% on Monday in anticipation of the big iPhone 12 event. Apple investors have high hopes for the first 5G-compatible iPhone, but short sellers are betting the sell-the-news drop is just getting started.

S3 Partners analyst Ihor Dusaniwsky says Apple’s short sellers have added $1.3 billion to their bearish bets in the month leading up to Tuesday’s iPhone event.

Apple now has $10.8 billion in total short interest, trailing just Tesla Inc (NASDAQ: TSLA) with $25.4 billion and Alibaba Group Holding Ltd - ADR (NYSE: BABA) with $14.3 billion on the list of the most heavily shorted stocks in the world.

Related Link: Option Trader Makes $1.4M Bet On Apple Ahead Of iPhone Event

Sell-The-News Trade? Apple is the most shorted stock in the tech sector, and Dusaniwsky said short sellers have increased their aggregate positions by 15.5% in the past month. In the week leading up to the iPhone event, short sellers added another 2 million shares to their bearish Apple bets.

Short sellers have taken a big hit on Apple in 2020. Dusaniwsky said Apple short sellers have endured $5.9 billion in net-of-financing mark-to-market losses this year. Apple short sellers added another $679 million in losses during Monday’s big rally alone.

“If AAPL stock rallies on good news we should expect a wave of short covering and shares shorted trend back down towards the 76 million share level we saw in early September,” Dusaniwsky said.

Benzinga’s Take: Analysts and investors are expecting the iPhone 12 to trigger a massive global upgrade cycle for Apple. However, with the stock up more than 100% in the past year, the market has already added more than $1 trillion in value to Apple in anticipation of the first 5G iPhone, and short sellers are betting it will be difficult for the device to live up to the hype.

Latest Ratings for AAPL

Oct 2020Raymond JamesMaintainsOutperform
Oct 2020Piper SandlerMaintainsOverweight
Oct 2020Credit SuisseMaintainsNeutral

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