Microsoft Short Interest Drops 28%

Two weeks ago, the frenzied buying of several heavily shorted stocks was winding down. Then Wednesday trading saw Gamestop’s share price double, and Thursday’s premarket trading pushed the stock up another 67%. Whether this is another concerted attack on short sellers in GameStop stock remains to be seen.

Whatever happens, it is unlikely to move shares of Microsoft Corp. (NASDAQ: MSFT | MSFT Price Prediction) by anywhere near the same numbers. Microsoft’s total float exceeds 7 billion shares, and short interest as a percentage of the total float was just 0.55% on February 12, the end of the most recent two-week reporting period for short interest.

As of that date, more than 40 million shares of Microsoft shares were short, a decrease of 9% from two weeks earlier. A year ago, more than 56 million shares of Microsoft were short.

The decrease in short interest in Microsoft stock during the latter half of February likely follows from the stock’s price increase of 5.6% in that time. That increase was more than doubles the Apple share price rise of 2.7% in the same two weeks. For the year to date, Microsoft stock has added 5.7%, compared with a drop of 5.4% in Apple stock.

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Higher price targets and overall higher analyst ratings are keeping the stock’s price high, and short sellers remain wary of betting against the company.

The stock closed Wednesday at $234.55 in a 52-week range of $132.52 to $246.13. The consensus price target on the stock is $273.43, implying a potential gain of around 16.5%. The high price target of $315 implies a share price gain of 34% over the next 12 months.

The consensus price target on the stock rose by about $0.50 in the two-week period after increasing by more than $3 during the final two weeks in January. Given the potential share price gains based on the stock’s current price, Microsoft stock is not a particularly attractive play for short sellers. The company keeps its head down and continues building its cloud and licensing businesses. The stock traded down fractionally Thursday morning to $233.72.

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