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Nov 16, 2018

S3 Analytics: Semiconductor Short Sellers Up $824 million on NVDA & AMD Guidance

The possibility of an economic slowdown has hit the technology sector hard, with the S&P 500 Information Technology Sector declining by 10% in the fourth quarter. Today’s poor reported results from both Nvidia (NVDA) and Applied Materials (AMD) pushed most of the companies in the Semiconductor and Semiconductor Equipment Sector into the red. Short sellers in the sector benefited to the tune of $824 million in mark-to-market profits, with the main winners being NVDA and AMD short sellers who are up $529 million and $162 million in mark-to-market profits, respectively.

The Semiconductor & Semiconductor Equipment Sector has seen a decrease in overall short interest in the fourth quarter with a decline of $8.7 billion, or -19.06%, in just seven weeks even though short sellers were up $5.6 billion in mark-to-market profits, or +14.17%, over that same period. Short interest in QCOM declined by $4.8 billion, AMD by $1.7 billion and NVDA by $693 million as short sellers exited the sector. Shorts may be seeing the sector nearing a price floor after the sector wide price weakness due to near-term revenue and guidance shortfalls relating to cryptocurrency equipment buying weakness, gaming chip weakness and data center revenue slowdowns.

We will see over the next several weeks whether short sellers will reverse their recent short covering trend and increase their short bets in the sector based on NVDA’s and AMD’s results or continue decreasing their short exposure to the sector favoring a longer term positive outlook over shorter term weakness.

Want deeper insight into the above analysis?
Contact:  Ihor.Dusaniwsky@S3Partners.net
                 Managing Director Predictive Analytics, S3 Partners, LLC
The information herein (some of which has been obtained from third party sources without verification) is believed by S3 Partners, LLC ('S3 Partners') to be reliable and accurate. Neither S3 Partners nor any of its affiliates makes any representation as to the accuracy or completeness of the information herein or accepts liability arising from its use. Prior to making any decisions based on the information herein, you should determine, without reliance upon S3 Partners, the economic risks and merits, as well as the legal, tax, accounting and investment consequences, of such decision.


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