Short Interest in Apple Moves Higher

By Douglas A. McIntyre Updated Jan 13, 9:35AM EST · Published May 11, 6:25AM EDT

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Short Interest in Apple Moves Higher — © Wikimedia Commons (JoelnQueens)

[cnxvideo id=”510429″ placement=”ros”]Wall Street has become schizophrenic about Apple Inc. (NASDAQ: AAPL). It is either doomed, since it has run out of the imagination to create new products, or it is the builder of the iPhone 7, which will revolutionize the smartphone industry. Short sellers slightly favored the pessimistic view as short interest in Apple shares moved up 3.8 million to total 56.4 million late last month.

Apple’s shares are down 15% over the past month to about $93. Despite support from some analysts who believe the company has promise and is worth $100 a share, there are others who believe Apple’s extraordinary run is over. Apple has had trouble lifting sales of the iPhone 6 family. Its iPad tablets face a shrinking market. The Mac has stopped taking a large part of the computer business from other personal computers. Apple TV will never match the popularity of Netflix or Amazon.com’s video offerings.

Apple’s latest quarterly earnings do give pessimists fuel:

The Company posted quarterly revenue of $50.6 billion and quarterly net income of $10.5 billion, or $1.90 per diluted share. These results compare to revenue of $58 billion and net income of $13.6 billion, or $2.33 per diluted share, in the year-ago quarter. Gross margin was 39.4 percent compared to 40.8 percent in the year-ago quarter. International sales accounted for 67 percent of the quarter’s revenue.

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And guidance was weak:

Apple is providing the following guidance for its fiscal 2016 third quarter:

revenue between $41 billion and $43 billion

gross margin between 37.5 percent and 38 percent

operating expenses between $6 billion and $6.1 billion

other income/(expense) of $300 million

tax rate of 25.5 percent

In addition, Apple’s revenue in Greater China was weak. Management has pointed to the region as critical to Apple’s future.

The shorts may be right.

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.