Consumer Electronics

Apple Short Interest Rises 12 Million as Concerns About iPhone Sales Increase

Douglas A. McIntyre

Published: December 28, 2017 6:29 am

Last Updated: January 12, 2020 5:04 am

Some inventors shorted Apple Inc.’s (NASDAQ: AAPL) shares during the period that ended December 15, just ahead of negative rumors about iPhone sales. The short interest in Apple rose 12.8 million to 52.1 million.

Usually, betting against Apple has been a large risk this year as shares have risen 46% to $170. However, in the past five days they are down almost 3%. Most of the drop has been attributed to speculation that sales of its iPhone X flagship have been poor, as well as word that Apple slowed the speed of operation of some earlier versions of the smartphone.

According to Reuters:

Shares in Apple Inc and several of its Asian suppliers fell on Tuesday after a report by Taiwan’s Economic Daily and comments from some analysts suggested iPhone X demand could come in below expectations in the first quarter.

Apple will slash its sales forecast for the iPhone X in the quarter to 30 million units, the newspaper said on Monday, citing unidentified sources, down from what it said was an initial plan of 50 million units.

Apple has not publicly disclosed quarterly sales targets for the iPhone X, which went on sale in November at a base price of $999 in the United States. An Apple spokeswoman said the company does not comment on market rumours.

Apple faces several lawsuits over the speed of older iPhones. According to MarketWatch:

Apple has been named in its first class-action suit for slowing down performance on older iPhones.

Following three suits filed in federal courts in Illinois, Los Angeles and Northern California last week, five lead plaintiffs in Brooklyn, New Jersey and Florida claim in the new suit that Apple fraudulently hid from consumers the fact that certain iPhones exhibited lower performance over time.

And if those customers went to an Apple Store to inquire about their sluggish phones, they were encouraged to simply buy a new iPhone rather than replace the battery, according to the suit filed in Brooklyn federal court on Tuesday.

This most recent lawsuit was brought against Apple, “for its failure to disclose that Apple has been purposely slowing down the processor of its iPhone 5, iPhone 6 and certain iPhone 7 models through operating system software updates.”

There may not be confirmation about sales of the iPhone X until Apple announces earnings. As the company is secretive about which models do well and which don’t, even then investors may not know. For the time being, the short bet on Apple was a smart one.