AMD, Apple Inc And Alibaba Stock - Short Interest Update

Short interest in Advanced Micro Devices, Inc (NASDAQ:AMD) declined before earnings.

AMD, Apple Inc And Alibaba Stock - Short Interest Update

The latest round of short interest data which is for the fortnight ending 13th of October indicates that after four consecutive increases, shorts had decreased their position in Advanced Micro Devices, Inc (NASDAQ:AMD) stock ahead of earnings. The number of shorted AMD shares fell by 7.4% or over 11 million shares from 160.5 million to 148.6 million, representing 16.8% of AMD's total float. Days to cover stood at 3 days. The decline in short interest indicates that some shorts were being cautious ahead of earnings given that many analysts were expecting huge movement in AMD stock post-earnings. MKM Partners' Jim Strugger expects AMD stock to move by over 10.5% after the earnings.

Well, AMD stock did move by over 10% after the earnings. AMD stock is down by around 11% in the after-market hours after the company reported its third quarter earnings. While the company reported better than expected top and bottom line figures, the guidance disappointed massively. Third quarter EPS came in at 10 cents against analysts estimates of an EPS of 8 cents, a 25% earnings surprise. On the top line front, the company reported revenue of $1.64 billion, 25.2% higher than what AMD had reported in the same quarter last year and $130 million higher than what analysts were expecting the company to report.

However, the company expects its fourth-quarter revenues will fall by about 12% to 18% sequentially, though that quarter-over-quarter decline would mark a nearly 26% year-over-year jump at its midpoint. On top of that, full-year sales are expected to increase by more than 20%, which is above AMD’s previous mid-to-high teens guidance. The fourth quarter guidance implies revenues of about $1.35 billion to $1.44 billion, the lower end of which is higher than analysts' estimate of a revenue of $1.34 billion. However, the fact that this represents the first sequential decline in the last seven quarters didn't go overly well with AMD stock shareholders. AMD also expects the tailwind from the cryptocurrency wave to level off in this quarter. AMD stock will continue to remain volatile going forward.

Short Interest in Apple Inc (NASDAQ:AAPL) stock declines ahead of earnings.

Short interest in shares of Cupertino based iPhone maker Apple Inc (NASDAQ:AAPL) has continued to decline for the fourth consecutive fortnight. As per the latest report, short interest in Apple stock declined by over 10% in the previous fortnight. The number of shorted shares fell by over 3.8 million from, from 38 million to 34.2 million with days to cover coming in at around 2 days. In the last four reporting periods, short interest has declined from 48.1 million shares to 34.2 million shares, a decline of over 28%. This means that lesser number of market participants expects a decline in Apple stock, which is a good news.

Apple is expected to report its fiscal fourth quarter earnings on November 2nd. Apple has guided for revenue to be between $49 billion to $52 billion, 7.7% higher than $46.9 billion revenues it had in the year-ago quarter. However, given the reports of lackluster demand for iPhone 8, many are skeptical whether Apple can deliver on its guidance. Apple stock has hit a rough weather of late. The stock has not gone anywhere in the last three months.

Alibaba Group Holding Ltd stock remains one of the most shorted stocks.

Alibaba Group Holding Ltd (NYSE:BABA) shareholders have had a fabulous year so far, with Alibaba stock returning over 100% in the year-to-day period. The strong performance in BABA stock is driven by better than expected earnings and strong guidance. However, not all are convinced about Alibaba story. Several investors continue to bet against Alibaba raising questions about Alibaba's accounting policies and its valuation multiples. Alibaba stock remains one of the most shorted stock in the world in terms of dollars at risk. The total dollars at risk jumped from $16.7 billion in June to $22 billion in September.
BABA stock chart

However, there has been some cooling off in the bearish sentiment against Alibaba stock. The short interest has climbed lower marginally in the last two reporting periods. According to the latest short interest report, the number of shorted shares fell from 134.3 million shares to 133.9 million. In the previous reporting period, short interest in Alibaba stock had fallen by 3.9% to 134.31 million shares from 139.79 million. One reason could be the fact that shorts have burned over $10 billion in losses betting against Alibaba stock.

We have remained bullish on Alibaba stock for some time now. Given the multi-billion dollar opportunities ahead of the Chinese eCommerce giant, it remains a good long-term buy. With more and more growth drivers emerging for the Chinese online retail giant, it would be rather too risky to bet against Alibaba stock for now.

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Kumar Abhishek Kumar Abhishek   on Amigobulls :

Neither Amigobulls, nor any members of its staff hold positions in any of the stocks discussed in this post. The author may not be a certified/registered investment advisor, and the opinions expressed should not be treated as investment advice.

Buying and selling of securities carries the risk of monetary losses.Readers/Viewers are advised to carry out their own due diligence and consult their investment advisors before making any investment decisions.

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