(Benzinga) – On Tuesday, Apple, Inc shares ticked lower by about 0.5% after the stock gained 6% on Monday in anticipation of the big iPhone 12 event. Apple investors have high hopes for the first 5G-compatible iPhone, but short sellers are betting the sell-the-news drop is just getting started.
S3 Partners analyst Ihor Dusaniwsky says Apple’s short sellers have added $1.3 billion to their bearish bets in the month leading up to Tuesday’s iPhone event.
Apple now has $10.8 billion in total short interest, trailing just Tesla Inc with $25.4 billion and Alibaba Group Holding Ltd – ADR
with $14.3 billion on the list of the most heavily shorted stocks in the world.
Sell-The-News Trade? Apple is the most shorted stock in the tech sector, and Dusaniwsky said short sellers have increased their aggregate positions by 15.5% in the past month. In the week leading up to the iPhone event, short sellers added another 2 million shares to their bearish Apple bets.
Short sellers have taken a big hit on Apple in 2020. Dusaniwsky said Apple short sellers have endured $5.9 billion in net-of-financing mark-to-market losses this year. Apple short sellers added another $679 million in losses during Monday’s big rally alone.
“If AAPL stock rallies on good news we should expect a wave of short covering and shares shorted trend back down towards the 76 million share level we saw in early September,” Dusaniwsky said.
Benzinga’s Take: Analysts and investors are expecting the iPhone 12 to trigger a massive global upgrade cycle for Apple. However, with the stock up more than 100% in the past year, the market has already added more than $1 trillion in value to Apple in anticipation of the first 5G iPhone, and short sellers are betting it will be difficult for the device to live up to the hype.