Wall Street has made a huge bet against the share price of Apple Inc. (NASDAQ: AAPL). The number of shares sold short, which is an investment that represents a gamble the stock will go down, rose by 143% to 97 million. So far this year, Apple’s share price is up 13%, almost exactly the same as the Nasdaq. The data are for the period that ended February 28.

The bet against Apple is based primarily on the sharp downward trend in iPhone sales and the assumption that trend will continue. Short sellers have to assume two things. Apple’s latest models are not enough of an upgrade that users will pay as much as $1,000 for them. And Apple’s sales in China, the largest wireless country in the world by subscriber count, will continue to flag. Despite these problems, Apple remains in first place on the list of most valuable brands.

Revenue from iPhone sales dropped 15% in the most recently announced quarter, the period that ended December 29. The falloff was unprecedented. The iPhone X does not have an improved enough camera compared to the iPhone 8, at least for many consumers. The new display offers brighter colors. Many experts who reviewed the iPhone X did not think that was much of an upgrade either. And the iPhone X may have a faster processor, but not sufficient enough for consumers to tell a difference of when using most applications.

Data released for China in February showed a 20% drop in iPhone sales in the four quarter compared with the same time last year. Local manufacturer Huawei tightened its grip on the first place. China-based Oppo and Vivo took second and third place. Apple recently cut the prices of its iPhone XR in China, which has helped sales rebound, but this will come at the cost of lower margins. In America, the view of Apple is different. It is considered one of the most patriotic brands in the United States.

Some analysts believe that Apple’s service revenue will help make up for the iPhone sales decline. These include iTunes, the App Store, the Mac App Store, Apple Music, Apple Pay and AppleCare. Revenue for these services topped $10 billion in the most recent quarter. That is, however, not close to replacing iPhone sales, and even at the current growth rate, it could be years before they offset sales of Apple’s flagship product. Apple’s streaming media business lags well beyond Amazon.com and Netflix. The use of its Siri voice-activated products is well behind those of Amazon’s Alexa-based products. Apple’s share of the market in this business is estimated to be only 4% worldwide.

What has become more evident recently is that Apple has lost some of its magic. Mac sales have been steady, but this will not fill in for flagging iPhone sales. Neither will sales of the Apple Watch. Many investors believe that Apple’s stock cannot rise until it has come up with some solution to what could be a long dip in iPhone sales. So far, willing to spend money to bet against Apple shares, they are convinced that will not happen.

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