Apple Short Interest Ticks Higher Ahead of Earnings

By Douglas A. McIntyre Published Oct 27, 6:53AM EDT

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Short interest in Apple Inc. (NASDAQ: AAPL) shares ticked higher ahead of the huge tech company’s earnings. The move was modest enough that it is not a good sign of short seller sentiment. However, Apple is still the sixth most shorted stock traded on Nasdaq, based on total shares sold short at 90,192,312.

The short interest in Apple for the period that ended on October 15 was up 3.6%, or 3,111,471, from the number at the beginning of the two weeks.

The concerns swirling around Apple fall into two categories. The first is whether the modest upgrades of the iPhone 6s will be enough to keep momentum in the latest version of the smartphone growing. It may be that people will stay with their iPhone 6 models and not upgrade, despite aggressive sales tactics by Apple’s U.S. carrier partners and probably those overseas.

The second issue is whether Apple can fulfill its plans to make China its most important market. China has the largest wireless subscriber market by far. The People’s Republic has just above 1.2 billion mobile users, barely shy of the country’s total population. Apple CEO Tim Cook has had to calm investors who worry that competition in China or a slowing economy there have hurt iPhone sales. In the quarter that ended July 21, $13.2 billion of Apple’s total $49.6 billion came from “Greater China.” This number was higher by 112%, compared to the same quarter a year ago. Apple’s total revenue improvement was 33% for the period.

The quarter that will include holiday sales also needs to show a sharp increase in Apple revenue. Like many other companies, Apple relies on the holiday period for much of its sales. With an aging iPhone line, that improvement may be harder to come by. So, Apple’s forecast for the period will be as critical to the prospects of its shares as much as anything else.

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Finally, the iPhone 7 is expected to be released next year. Some iPhone 6 owners will wait for that event, and this will put downward pressure on iPhone sales for the time being.

Recent short sentiment mirrors the ambivalence about Apple’s near-term prospects.

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.