Between the concerns about Apple Watch sales and anxiety about upcoming earnings, Apple Inc.’s (NASDAQ: AAPL) stock has fallen recently and was at a multi-month low last week. Is it any wonder then that short interest in its shares has jumped? Some portion of the market has gambled that the stock price will drop more.
Apple’s shares were down 4% in the past five days, but closed the week down 3% at $123.28. Short interest in Apple rose by 3.2 million shares in the period that ended June 30 to 63.7 million. That made Apple the 10th most shorted stock on the Nasdaq.
Apple Watch sales have collapsed, according to some analysts. MarketWatch reported:
Sales of the new Apple Watch have plunged by 90% since the opening week, according to a new market-research report.
Apple has been selling fewer than 20,000 watches a day in the U.S. since the initial surge in April, and on some days fewer than 10,000, according to data from Palo Alto, Calif.-based Slice Intelligence.
That is a sharp decline from the week of the April 10 launch, when Apple sold about 1.5 million watches, or an average of about 200,000 a day, Slice estimates.
If true, the launch of Apple’s first hardware device in years would be a catastrophe.
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Unexpectedly large sales of the iPhone would more than offset bad Apple Watch numbers. Recent rumors are that Apple has ordered 90 million of the next generation iPhone to be delivered by year-end. If so, it might be assumed that sales for the quarter about to be reported will be solid. And Apple’s forecast for the final quarter of the year should be spectacular, despite Apple’s well-known penchant for offering conservative guidance.
The other primary driver of Apple’s quarterly numbers will be China, the only market that has grown sharply recently. Greater China sales were $16.8 billion of Apple’s total of $58 billion, but revenue there rose 71% year over year. Apple management has not been shy about the importance of adoption in the world’s largest wireless market.
Short sellers will not have long to wait to see whether they are right.
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