Shorted stocks list: this week’s most shorted stocks
Here's a list of the most shorted stocks this week to May 27 2022, by average sell volume from our UK client accounts.
- Tesla Motors
- Exxon Mobil
- Anglo American
- Compass Group
- BHP Group
- Rio Tinto
- Lloyds Banking
Tesla shares are still down 0.95% so far this week, despite recovering 7.43% in yesterday's session. Tesla' shares had fallen to an 11-month low on Tuesday as concerns about the company and its CEO added to an already poor week for tech stocks. $30 billion was wiped off its valuation. This came after an analyst cautioned investors about Tesla's vehicle delivery being lower than expected and the ongoing discussions over Musk's involvement with Twitter.
Exxon Mobil is up 5.12% this week. On Wednesday it hit a 52-week high that saw the company's valuation break through the $400 billion mark. The new market cap means that Exxon is close to becoming one of the top 10 constituents in the S&P 500 - it currently sits at number 12, which is already a far cry from the #26 position it had coming into 2022. The company's performance has raised concerns that sentiment could turn and the share price could correct.
Anglo American stock is up 7.34% this week. This comes as four investment analyst rated the stock 'hold' and two issued 'buy' recommendations. As the UK government is set to introduce a windfall tax on energy companies, eyes are turning to the FTSE big miners - especially those with a strong growth rate and history of dividends.
Compass Group shares are up 3.28% over the last week but yesterday RBC Capital Markets set a price target for the company at 1,500, which indicates a potential downside of 16.3%.
BHP Group is up 1.76% despite falling by 10% yesterday morning. This downturn was caused by the mining giant's share trading ex-dividend. Shareholders will soon receive one new Woodside share for every 5.534 BHP shares they own.
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Most short-sold stocks explained
The most shorted stocks are those that have been sold the most over a period of time, in this case a week.
Traditionally, in order to short a stock, you’d have to borrow the asset from a third party before you could sell it on the market. You’d do so in the belief that the market price would fall, and you could buy it back at a lower price, pocketing the difference before you return the shares to your lender.
Now, thanks to electronic trading and derivatives, shorting a stock is just as straightforward as buying it. You just click ‘sell’ in your platform rather than ‘buy’. This is because you’ll never take ownership of the shares, you’re just speculating that it will fall in price.
Heavily shorted stocks create a bear market, where sellers enter and put downward pressure on the asset’s price. Buyers are forced to close their positions before they lose too much money, causing the market price to just fall lower and lower.