Shares Short | StockSignal

How it relates

Shares Short÷Avg 30-Day VolumeAverage 30-day volume is the average number of shares traded per day over the last 30 trading days. It gives a more stable view of typical trading activity.=Short RatioShort ratio (days to cover) tells you how many days of average trading it would take for all short sellers to buy back their borrowed shares. Higher values mean shorts could take longer to close their positions.

Shares Short÷Shares OutstandingShares outstanding is the total number of shares that exist for this company. It's used to calculate things like market value and earnings per share.=Short % of Shares OutstandingShort % of shares outstanding shows what fraction of all shares have been sold short. A high percentage can mean strong bearish sentiment or the potential for a short squeeze.

Where it fits

Shares Short→Short InterestShort interest represents the total number of shares that have been sold short but not yet covered, indicating bearish sentiment and potential future buying pressure.

Shares short (or short interest) represents the total number of shares that have been sold short and not yet covered or closed out. Short selling involves borrowing shares and selling them, with the obligation to eventually buy them back. High short interest indicates that many investors are betting the stock price will decline.

The mechanics of short selling:

Investor borrows shares from a broker (who sources them from other clients' holdings)
Borrowed shares are sold immediately at current market price
Eventually, the investor must buy shares to return to the lender ("covering" the short)
Profit occurs if the repurchase price is lower than the sale price; loss if higher

Short interest data is typically reported twice monthly by exchanges with a delay of about 10 days. This lag means the figures represent historical snapshots rather than current positions.

Key interpretations of short interest:

Bearish sentiment: High short interest suggests widespread expectation of price decline
Contrarian indicator: Extremely high shorts can signal excessive pessimism, potentially setting up a rally
Short squeeze risk: If price rises, short sellers may rush to cover, accelerating the upward move
Hedge activity: Some shorts are hedges rather than directional bets, complicating interpretation

For example, a company with 10 million shares short out of 100 million outstanding has 10% short interest. If only 50 million shares are in the float, short interest relative to float is 20%—a more meaningful figure for assessing squeeze potential.

Short sellers face unique risks:

Unlimited loss potential: A stock can theoretically rise indefinitely, magnifying losses
Borrowing costs: Hard-to-borrow stocks carry high lending fees
Forced covering: Lenders can recall shares, forcing shorts to close at inopportune times
Dividend payments: Short sellers must pay any dividends to the share lender

Increasing short interest over time may warrant investigation into why sophisticated investors are betting against the stock. However, high short interest alone isn't a sell signal—sometimes the shorts are wrong.