Apple Short Interest Falls 10%

By Douglas A. McIntyre Published Mar 25, 6:42AM EDT

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The short interest in Apple Inc. (NASDAQ: AAPL) recently dropped 9.6% to 65.7 million shares, a possible sign that traders who benefit from falling share prices have stepped away from the company as its stock continues to soar.

The measure of short interest in Nasdaq stocks is as of March 13.

The wisdom of the short sellers’ decision is supported by the movement of Apple’s shares since the beginning of the year. Despite its mammoth $744 billion market cap, Apple’s stock is up almost 15%, compared to an improvement of less than 6% in the S&P 500. Short sellers betting against Apple for a longer period may have been burned as well. Apple’s shares are up 91% over the past two years, against a 54% improvement in the S&P 500.

The gamble against Apple shares is primarily a bet that it cannot keep up its remarkable revenue growth, based primarily on sales of the iPhone. In the most recently reported quarter, Apple announced:

… financial results for its fiscal 2015 first quarter ended December 27, 2014. The Company posted record quarterly revenue of $74.6 billion and record quarterly net profit of $18 billion, or $3.06 per diluted share. These results compare to revenue of $57.6 billion and net profit of $13.1 billion, or $2.07 per diluted share, in the year-ago quarter. Gross margin was 39.9 percent compared to 37.9 percent in the year-ago quarter. International sales accounted for 65 percent of the quarter’s revenue.

Apple sold 74.4 million iPhones for the period, which brought in $51.2 billion. The full effect of the sales of the iPhone 6 and iPhone 6 Plus will not show up until Apple releases numbers on its current quarter. However, nearly every piece of data about the new smartphone indicates its sales have been wildly successful.

The other factor that may prove short sellers have made a mistake is the introduction of the Apple Watch, although many analysts believe it is too expensive and short on features. If that point of view is correct, short sellers of Apple shares may regret their exit.

ALSO READ: iPhone 6 Survey Shows That Apple Is Not the Only Big Tech Winner

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.