Short selling a stock means you are betting that its price will go down. To take a short interest in a stock, you borrow shares from a brokerage and then sell them, hoping to buy them back and profit when the stock price declines. The total amount of a company's outstanding shares that are sold short is called the short interest, and it is relatively easy to find.
Finding a Stock's Short Interest
Stock exchanges keep track of how many shares of their stocks are sold short each month and report the numbers on their websites. Many other websites, such as those for The Wall Street Journal, Yahoo and Google, also report short interest in stocks. On the Nasdaq website, for example, when you look up a stock, there is a button in the menu down the side of that page specifically for short interest. Nasdaq updates each stock's short interest twice a month.
What's the Significance?
If a significant number of a company's shares have been sold short, it indicates a lot of investors are betting the stock will fail and could be a sign that the company is in trouble. A February 2014 Forbes article points out that high short interest combined with insider selling by company executives and board members is a bad sign for the stock.
- Forbes: Watch For Stocks With High Short Interest And Insider Buying
- Motley Fool: Shorting Stocks
- Saint Louis University: Where Can I Find Data About Short Sales (or Short Interest) of Stock?
- Nasdaq. "Nasdaq Short Interest Publication Schedule." Accessed April 2, 2020.
- New York Stock Exchange. "Report Center." Download Current Month's Short Interest Report. Accessed April 2, 2020.
Matt Olberding has been a professional journalist for nearly 20 years. His career has included stints as a copy editor, page designer, reporter, line editor and managing editor at newspapers ranging from community newspapers to major metros. Olberding has been a business writer and editor for a decade.