Short Interest – What It Is, What It Is Not (2024)

What Is Short Interest?

To understand what short interest is, we should first talk about short sales. Put simply, a short sale involves the sale of a stock an investor does not own. When an investor engages in short selling, two things can happen. If the price of the stock drops, the short seller can buy the stock at the lower price and make a profit. If the price of the stock rises, the short seller will lose money. An investor may engage in short selling for many reasons, such as to profit from a decline in the price of a stock or to hedge the risk of other positions.

To open a short position, an investor places a short sale order with their brokerage firm in a stock that the investor does not own. This is done in a margin account. Because the investor does not own the shares, the brokerage firm will look to “locate” shares prior to executing the short sale. These shares may be identified in the brokerage firm’s inventory, the margin accounts of other customers or another source. Once the trade is executed, the investor’s margin account will show the proceeds of the sale. Ultimately, the investor must obtain these securities to close the position. Until this occurs, the investor’s account will reflect a short position. To close the position, the investor can purchase the stock in the market, which they hope will be at a lower price than they sold the shares short.

“Short interest” is a snapshot of the total open short positions existing on the books and records of brokerage firms for all equity securities on a given settlement date. Short interest data is collected for all stocks—both those that are listed and traded on an exchange and those that are traded over-the-counter (OTC). FINRA and U.S. exchange rules require that brokerage firms report short interest data to FINRA on a per-security basis for all customer and proprietary firm accounts twice a month, around the middle of the month and again at the end of each month.

For stocks listed on a U.S. exchange, FINRA shares the data with the listing exchange. FINRA also publishes the short interest reports it collects from member firms for all exchange-listed and over-the-counter equity securities on its Equity Short Interest Data page free for the broader investing public.

What Short Interest Is Not

In addition to short interest data, FINRA also publishes short sale volume data. The daily short sale volume data provides aggregated volume by security for all off-exchange short sale trades. This data excludes any trading activity that is not publicly disseminated and is not consolidated with exchange data.

Some market participants mistakenly conclude that the bimonthly short interest data is understated because the Short Sale Volume Daily File reflects volume that is much larger than the positions reported as short interest. However, short interest position data does not—and is not intended to—equate to the daily short sale volume data posted on FINRA’s website.

The short interest data is just a snapshot that reflects short positions held by brokerage firms at a specific moment in time on two discrete days each month. The Short Sale Volume Daily File reflects the aggregate volume of trades within certain parameters executed as short sales on individual trade dates. Therefore, while the two data sets are related in that short sale volume activity may ultimately result in a reportable short interest position, they are not the same.

Investors might establish short positions in a security that continue to exist for varying lengths of time, which can result in a short position being represented in one of the data sets but not the other. For example, an investor might sell a security short and purchase shares to close the position on the same trade date. That position would not appear in the short interest data, though the short sale transaction would appear on the Short Sale Volume Daily File.

On the other hand, an investor might hold a short position open for days or weeks, perhaps as a hedge against another position. While the short sale transaction that established that short position would appear in the Short Sale Volume Daily File only on the date the short sale transaction occurred, the short position would continue to be reflected in the short interest data for as long as the position remained open.

Learn more about short sale volume data.

What Should I Know About Short Interest Data?

Some websites might redistribute the Short Sale Volume Daily File and refer to the data as “short interest,” but this is incorrect because, as explained above, short sale volume data is not the equivalent of short interest position data. In addition, the specific information that an investor sees depends on the source. Often, the data shown on free investor sites represents the results of a proprietary calculation and not the raw short interest data that FINRA and the exchanges disseminate. Different data providers may use different methodologies for calculating and displaying short sale information that are beyond FINRA’s control. Investors are encouraged to seek information from the data provider to understand how the data displayed is derived.

Short Interest – What It Is, What It Is Not (2024)

FAQs

What is the meaning of short interest? ›

Short interest refers to the number of shares sold short but not yet repurchased or covered. The short interest of a company can be indicated as an absolute number or as a percentage of shares outstanding. The short interest is looked at by investors to help determine the prevailing market sentiment toward a stock.

Why is high short interest bad? ›

If a stock has a high short interest, short positions may be forced to liquidate and cover their position by purchasing the stock. If a short squeeze occurs and enough short sellers buy back the stock, the price could go even higher. Unfortunately, however, this is a very difficult phenomenon to predict.

What does it mean if short interest is over 100%? ›

While, in theory, short interest should not exceed 100% of the float, it can sometimes go even higher. A high percentage of short interest can indicate negative sentiment for a company and lower the stock price.

What was the short interest on GameStop? ›

Indeed, GME's short interest cracked the 20% mark during various periods throughout both 2022 and 2023. According to the latest available data, which were released on December 14, 2023, approximately 23.3% of GameStop's float is short.

What is an example of a short interest? ›

Short interest is determined by the number of shares sold short divided by the stock's float (or number of shares outstanding). For example, if 100 million Apple shares are outstanding and 10 million Apple shares are shorted, we can say the short interest on Apple is 10 percent.

What is short interest and is it good? ›

A stock's short interest is the percentage of its floating shares that are currently sold short—and an indicator of how bearish the market is about that stock in general. The higher a stock's short interest, the more investors are currently betting on its decline.

Is 7% short interest high? ›

Short interest as a percentage of float below 10% indicates strong positive sentiment. Short interest as a percentage of float above 10% is fairly high, indicating significant pessimistic sentiment.

What is the biggest short squeeze in history? ›

What Was the Bigggest Short Squeeze in History? The biggest short squeeze in history happened to Volkswagen stock in 2008.

What does it mean if a stock has a lot of short interest? ›

Most stocks have a small amount of short interest, usually in the single digits. The higher that percentage, the greater the bearish sentiment may be around that stock. If the short % of the float reaches 10% or higher, that could be a warning sign.

Who loses in short selling? ›

Put simply, a short sale involves the sale of a stock an investor does not own. When an investor engages in short selling, two things can happen. If the price of the stock drops, the short seller can buy the stock at the lower price and make a profit. If the price of the stock rises, the short seller will lose money.

What stocks have the highest short interest right now? ›

Most Shorted Stocks
Symbol SymbolCompany NameFloat Shorted (%)
UPST UPSTUpstart Holdings Inc.36.92%
BAER BAERBridger Aerospace Group Holdings Inc.36.90%
BYND BYNDBeyond Meat Inc.35.83%
MPW MPWMedical Properties Trust Inc.35.20%
44 more rows

How do you tell if a stock is being shorted? ›

Search for the stock, click on the Statistics tab, and scroll down to Share Statistics, where you'll find the key information about shorting, including the number of short shares for the company as well as the short ratio.

Can a stock be shorted multiple times? ›

Yes, a share can be lent and shorted more than once: If a short-seller borrows shares from one brokerage and sells to another brokerage, the second brokerage could then lend those shares to another short-seller. This results in the same shares counted twice as "shares sold short."

Who short sold GameStop? ›

Carl Icahn's big short of GameStop — the famous meme stock that took down hedge fund Melvin Capital — looks to have been quite profitable.

What's the highest GameStop stock price? ›

GameStop's Highest Stock Price Was $483

The height of GameStop's stock price came on January 28, 2021.

Is short interest good for a stock? ›

Since investors sell a stock short if they expect it to decline in value, short interest is a bearish indicator. The higher a stock's short interest, the less optimistic the market is about its near-future performance.

How long can you hold a short position? ›

You can maintain the short position (meaning hold on to the borrowed shares) for as long as you need, whether that's a few hours or a few weeks. Just remember you're paying interest on those borrowed shares for as long as you hold them, and you'll need to maintain the margin requirements throughout the period, too.

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