More Than Half of These Three Stocks' Outstanding Shares Were Sold Short in 2022

On average, more than half of these three stocks' outstanding shares were sold short in 2022.

If there was one big economic story of 2022, it would be the decades-high inflation. It persisted throughout 2022, so it's no wonder that consumer discretionary was the most-shorted sector of the year. 

However, what may be even more interesting than identifying the most-shorted sector is the severity of the short interest in the most out-of-favor stocks. At least three names saw more than half of their shares sold short, on average. 

The most- and least-shorted sectors

Data from S&P Global Market Intelligence shows that short-sellers stayed with consumer discretionary throughout the year — betting that the high inflation would crimp demand. Short interest in stocks belonging to the sector on all major U.S. exchanges ended the year at an average of 5.01%. In fact, consumer discretionary ended up being the most-shorted sector throughout 2022.

Short interest measures the percentage of outstanding shares borrowed by short-sellers. Short interest in the S&P 500 averaged 2.25% for 2022.

According to S&P Global Market Intelligence, consumer discretionary has been the most-shorted U.S. sector since July 2021, when it unseated healthcare. At the end of 2022, short interest in healthcare stood at an average of 3.88%, a decline from its peak of 4.48% in May.

Unsurprisingly, the least-shorted sector in 2022 was financials, which benefited from the soaring interest rates. Short interest in financials averaged 1.36% at the end of the year, up from less than 1% at the beginning of the year.

Diving into consumer discretionary

The most-shorted part of the consumer discretionary sector in 2022 was home furnishing retailers, which saw their short interest average 14.05% at the end of the year. Short interest in department stores averaged 11.57% in 2022, followed by automotive retail at 11.52%.

At the opposite end of the spectrum, home improvement retail saw the lowest average short interest among consumer discretionary stocks, coming in at 5.44%. Household appliances averaged 6.65% short interest in 2020, while apparel retail averaged 6.74% short interest.

As far as individual stocks, Carvana, EVgo, and Bed Bath & Beyond were the three most-shorted consumer discretionary stocks at the end of the year. In fact, more than half of Carvana's outstanding shares were sold short, on average. Short interest in Carvana skyrocketed from 12.59% at the end of 2021 to 51.06% at the end of 2022.

Short interest in EVgo averaged 35.85% at the end of 2022, while Bed Bath & Beyond short interest averaged 33.03%. Other stocks that landed among the top 10 most-shorted consumer discretionary stocks in 2022 included Big Lots, Wayfair, Camping World Holdings, and Big 5 Sporting Goods. 

Across sectors

Overall, Carvana was the second-most-shorted stock at the end of 2022. Believe it or not, Silvergate Capital's average short interest surged from 10.09% at the end of October to an incredible 53.6% at the end of December. Grom Social Enterprises was the third-most-shorted stock with an average short interest of 50.64% at the end of the year.

While consumer discretionary was the most-shorted sector of 2022, real estate saw the largest increase in average short interest throughout the year, rising from 1.92% at the end of 2021 to 2.55% at the end of 2022. Real estate took a hit from the continuing work-from-home trend, which had a significantly negative impact on commercial real estate.

Real estate services were the most-shorted part of the sector at the end of the year, with average short interest of 4.71%.