Short Interest

The percentage of outstanding shares that are currently shorted.

Suppose company A has 100 million shares outstanding and has a short interest of 2%. It would mean that 2 million shares of the company’s stock are shorted.

Some people believe that a large short interest indicates that a company’s stock may go up, since short sellers must cover at some point. However, that may be far in the future and the stock may be down further in price by then.

Some of the most notable companies that went bankrupt or became meshed in troubles and were unable to recover had a large short interest the whole way down. Investor caveat.

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