In the recent sell-off of technology stocks, short sellers have gained a lot. S3 partners, a technology and data analysis company, expects that for every $5 short sold in the U.S. market last quarter, $1 came from it stocks. S3 partners said that so far this year, short positions in the IT industry have generated 34% of profits. On Tuesday, snap's share price plummeted, and short sellers received an implied return of $535 million.
Rising inflation and rising interest rates are expected to depress demand for technology products and services, as well as the net present value of technology stocks. Although the technological revolution continues, the asset foam is bursting.
Today, such selling (short selling) has extended from high growth companies that have not yet made profits to technology giants. This year, the NASDAQ Composite Index (technology stocks account for more than half of the total index) has fallen 29%.
Companies with soaring valuations during the epidemic have attracted some of the largest short positions, dominated by software and semiconductor companies. Microsoft's short position is more than $10 billion, NVIDIA is $5 billion, and Apple The company has more than $15 billion.
For large technology companies, short positions account for only a small proportion of free floating shares. Microsoft's market value is $1.95 trillion, which means that short positions are only 0.5% of the total market value.
But the sharp sell-off means that small positions can gain huge profits. Social media company snap's share price plunged 43%, bringing a windfall to short sellers, who had an exposure of $1.2 billion the day before.