Apple Overtakes Tesla As The Most Shorted Stock: Here's Why It Matters — And Why It Doesn't

The largest publicly traded company in the world is now the most shorted stock by dollars, according to a new report. This doesn’t mean that Apple Inc AAPL will see a short squeeze anytime soon.

Here’s a look at why it matters — and why it doesn’t.

What Happened: Apple is now the most shorted stock in the public markets by dollars, according to a report from S3 Partners.

Apple has $18.44 billion in shares short. The total now passes the previous record holder, electric vehicle giant Tesla Inc TSLA. According to the report, Tesla has $17.44 billion in shares short.

“Tesla has held the top spot in the short interest league tables for 864 days, almost two and a half years since April 2020, but Apple has recently recaptured the crown,” S3 Partners Managing Director Ihor Dusaniwsky said.

Related Link: 10 Stocks That Could Soar As Short Squeeze Candidates 

Why It’s Important — and Isn’t: Apple is the largest public company in the world with a market capitalization of $2.5 trillion. The new leader in shares short by dollar has only 0.7% of its float short, a small percentage.

Tesla, the former leader, has a market capitalization of $952 billion. The company has 1.8% of its float short, much higher than Apple, but again a very small percentage.

A look at the current Fintel short squeeze leaderboard, which predicts which companies are most likely to see a short squeeze, doesn’t show Apple or Tesla anywhere near the top. Instead, the top 10 candidates for short squeezes saw 13% or higher of their float short and in many cases high cost to borrow on shares. Eight of the top 10 short squeeze candidates have short interest of 24% or higher.

With a large number of shares out in the public float, billions of shares in both cases, the cost to borrow on Apple and Tesla will likely remain low.

The increase in shares short for Apple could signal a reverse in sentiment for the company.

The company recently unveiled its iPhone 14 and saw mixed reactions from the public and analysts. Some, including Apple co-founder Steve Jobs' daughter, pointed to the similarities between the iPhone 13 and iPhone 14 as being too close.

Some analysts said there were enough updates to warrant users to switch to the newer model.

The increased short interest could indicate some investors saw the iPhone 14 as not having strong sales as anticipated or it could be a bet against the strength of the overall economy with an annual phone upgrade being a potential item skipped by some in the era of high inflation.

AAPL, TSLA Price Action: Apple shares traded at $149.07 at the time of writing, down 18% year-to-date. Tesla shares trade at $298.60 at the time of writing, down 25% year-to-date.