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Apple short interest: AAPL stock price resurgence deters bets on further declines

By Alejandro Arrieche

Edited by Jekaterina Drozdovica

16:01, 22 November 2022

Apple Store on 5th Avenue
Could Apple stock be the next target of a short squeeze? Photo: canadastock / Shutterstock

Apple (AAPL) stock has fallen in line with the bearish sentiment in 2022, yet outperformed the wider market thanks to the company’s solid financial position, experienced leadership team and well-established brand. Meanwhile, Apple short interest has been dropping since August of 2022. 

Apple (AAPL) live stock price

Is there a possibility of an Apple short squeeze in 2022? Here we take a look at the latest news on the iPhone maker’s short interest ratio and outlook for the stock. 

What is Apple (AAPL)?

Founded in 1976 by Steve Jobs and Steve Wozniak, Apple is one of the world’s largest tech firms by market capitalisation, as of November 2022. 

The company’s popular products include the iPhone, iPad, MacBook Pro, MacBook Air, Apple Watch and Airpods. 

In addition, Apple generates money from subscriptions and content sales via its proprietary mobile app store and iTunes online music store.

As of November 2022, Apple’s CEO was Tim Cook, who was appointed to this position in 2011 shortly after the firm’s founder Steve Jobs passed away. The company is headquartered in Cupertino, California, and, as of September 2022, had 164,000 full-time employees.

Apple became a publicly traded company in December 1980, when the stock was floated at $22 a share. Since then, the company has split its stock five times. On a split-adjusted basis, the price of the initial public offering (IPO) would be 10 cents, as of November 2022. 

Since going public 42 years ago, Apple stock has gained 148,380%, as of 21 November. Over the past 10 years, the stock price has increased by 762%, outperforming the Nasdaq 100 (US100) and S&P 500 (US500) indices in the same periods.

Apple stock price, 2017 - 2022

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Apple short interest drops in November as stock price zig-zags

According to data from MarketBeat, Apple short interest started to rise in late June 2022 and peaked in late August when $19.99bn worth of AAPL stock were borrowed by short sellers expecting the rally in the share price to come to an end.  

And that’s exactly what happened as the stock price fell 12% in September amid fears that the hawkish policy of the US Federal Reserve (Fed) could trigger a recession.

By late September, short sellers were already taking some gains as indicated by the change in the Apple stock short interest, which moved from its 15 September peak of 116.08 million shares shorted to 103.25 million 15 days after.

By the end of October, the number of AAPL shares sold short fell by 5% from the previous report to 103.18 million as the stock price recovered by 11% in September on the back of the broader market rebound. Overall short interest, however, rose from $15bn to $16bn as individual shares became more expensive. 

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At the time of writing (22 November), Apple's short interest ratio stood at 0.65% of all shares. 

Is an Apple short squeeze likely?

It’s worth noting that the Apple stock short interest, as of 21 November, is so low that, as a percentage of the company’s total float, it is considered negligible. Even though short sellers may have upped their bets that the stock would fall, their activity isn’t considered influential enough to create room for an Apple short squeeze.

The days-to-cover metric supports this argument – it would take short sellers 1.2 days to fully cover their borrowed positions based on the stock’s average daily volumes. This number is too low to prompt a short squeeze as trading volumes would hardly move even if all of Apple’s short positions were closed in a single day.

The odds of an Apple short squeeze occurring soon are low. For one to happen, Apple short interest volume would have to dramatically rise as a result of company-specific news or macroeconomic events that could severely disrupt the firm’s financial wellbeing and future performance.

Apple stock: Analyst commentary & predictions

According to data from MarketBeat, the consensus recommendation for Apple stock stood at ‘moderate buy’, as of 22 November, with 23 out of 32 analysts rating the stock a ‘buy’. Another six rated the stock a ‘hold’ and two as a ‘sell’.

The highest price target for AAPL stock stood at $210 and the lowest at $136. Analysts’ price targets averaged at $176 for the next 12 months. 

In late September, Bank of America downgraded Apple from ‘buy’ to ‘neutral’, citing the possibility of “weaker consumer demand” next year as a result of macroeconomic headwinds.

"We view the slowdown in services and relatively lackluster iPhone lead times as indicators that consumer spending will slow,” commented analyst Wamsi Mohan in a note to clients. 

Inflation has been ravaging multiple developed economies, including the US – the country’s Consumer Price Index (CPI) rose by 7.7% in October, compared to a year ago.

Meanwhile, analyst Abhinav Davuluri from Morningstar commented on 31 October: 

“While we remain positive on Apple's ability to extract revenue and robust profits from its installed base via new products and services, we believe demand for the company's products is likely to slow in the next few quarters following several stellar quarters of growth.” 

Note that analysts’ views can be wrong. You should always conduct your own due diligence, looking at the latest news, a wide range of commentary, fundamental and technical analysis.

Remember, your decision to trade should depend on your risk tolerance, trading strategy and other personal factors. Never trade money you cannot afford to lose.

FAQs

Where does the Apple short interest stand at the moment?

As per data from MarketBeat, Apple short interest stood at 103.18 million shares valued at $15.82bn, as of 22 November, based on the price of $153.34 a share. This amount is negligible compared to the market capitalisation of Apple, which exceeded the $2tn mark at the time of writing.

Will an Apple short squeeze happen soon?

At the time of writing, AAPL short interest – expressed as a percentage of the stock’s float – indicated that the odds of a short squeeze were low.

Should I invest in Apple?

Your decision to invest in Apple should depend on your risk tolerance, investing goals and other personal factors. Always conduct your own due diligence before investing. And never risk more money than you can afford to lose.

Markets in this article

US500
US 500
5246.2 USD
-3.8 -0.070%
US100
US Tech 100
18262.1 USD
-20.5 -0.110%
AAPL
Apple Inc (Extended Hours)
172.58 USD
-0.65 -0.380%

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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