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 a notable rise and fall in short interest over the past week.

Short selling data is reported four days behind today’s date as reporting is not mandatory until three business days post trade. The data below refers to short interest changes for stocks between 5-10 May.

Most Shorted Stocks 

Incremental changes

• Flight Centre and Zip remain the top two most shorted stocks

• Appen experiences a spike in short interest

• Most of the top ten remain intact, with only Select Harvests moving in and Megaport moving out

Rising Shorts

Appen’s trading update

On Wednesday 10 May, Appen shares nosedived 28% after flagging a softer-than-expected start to FY23 and guided towards a “materially lower” first half. 

The company also announced plans to accelerate cost reduction plans, targeting approximately $36 million in savings in FY23-24. These cost reductions plans would result in one-off costs of approximately $4-5 million.

Appen had $27 million in cash at the end of April but the business was not profitable in FY22 – logging a steep $22.8 million loss compared to a $40.6 million profit in FY21. 

One week later, the company announced a $60 million capital raising at a 19.6% discount to its previous close. Appen said the funds would be used to provide “balance sheet flexibility and support general working capital requirements to support Appen’s return to profitability.”

Appen was down as much as 17% on Wednesday, marking another massive win for shorters.

Appen 12-month price chart (Source: Market Index)

Falling Shorts

Winners and losers

• Winner #1: Vulcan raised $109 million at a 17.2% discount Friday 5 May, which triggered a 16.4% selloff on the day. The decline in short interest may reflect some covering/profit taking. 

• Winner #2: Best & Less received a lowball takeover offer of $1.89 per share from BB Family International Trust – which already had a 16.45% stake in the company. This offer price was 4% lower than where the stock was trading. Over the next few days, the stock would progressively fall towards the lowball offer price.

• Loser #1: Kogan shares rallied as much as 30% between 20 April and 5 May, after a third quarter FY23 trading update noted significantly corrected inventory levels but still-subdued sales activity. 

Kogan 12-month price chart (Source: Market Index)