The most shorted stocks on the ASX: Everything you need to know this week

Welcome back to the Short Seller Series, where we recap the most shorted stocks on the ASX as well as those experiencing notable rises, or falls, in short interest over the past week.

Short selling data is four days behind today's date because reporting is not mandatory until three business days after the trade. The data below refers to short interest changes for stocks between 25 and 31 May.

Most shorted stocks

What’s changed

• Flight Centre, Core Lithium and Lake Resources remain the top 3 most shorted

• Megaport jumped back top #4 from #14 a week ago

• Discretionary names like Temple & Webster and Breville inch higher

• IDP Education jumps to #9 from #24 a week ago

Where are shorters going?

• Lithium shorts aren’t backing down: This is despite Chinese lithium carbonate prices rallying to 305,000 yuan a tonne last week, up from lows of 167,800 yuan a tonne in late April.

• Shorters bracing for a capital raise: 29Metals provided a strategic update on 23 May and the stock fell as much as 40% over the next two days. Analysts were generally concerned about the need for additional capital to restart production and unlock growth at the company’s Capricorn Copper and Golden Grove projects.

• Shorting retail weakness: ASX-listed retail stocks are dropping like flies. In the past few weeks, names like Universal, Baby Bunting and Adairs all sold off more than 10% following trading updates. Macquarie’s high frequency data indicates lower furniture spend in May, dropping to 2.4% of total spend, below its 3-year average of 3.3%. It also noted a substantial decline in foot traffic for Nick Scali in February and March. 

Where are shorts covering?

• Unprofitable tech stocks: The flight to megacap US tech stocks, AI hype and Nvidia earnings has helped the S&P/ASX 200 Tech Index rally around 13% since the start of May. While short interest remains elevated, they’re beginning to cover.

• Appen is still very expensive: Citi retained a SELL rating for Appen last week, citing concerns about how the stock is trading at 58 times FY24 EBITDA.

• Covering or profit taking: Names like Zip, PointsBet and Bank of Queensland have been battered and despite recent bounces, have returned to recent lows. Does the decline in short interest reflect an improvement in outlook or perhaps profit taking such downward moves?