U.S. short sellers profited heavily from the chaos of 2022, to the tune of $300.1 billion, with communication-services stocks being the most profitable.
Profit from short selling U.S. stocks and American depositary receipts, on a mark-to-market basis, rose 30.8% in 2022, with an average short interest of $973.33 billion invested, according to a Wednesday report by S3 Partners Research. That followed three tough years in a row where short sellers lost a total of $571.76 billion, S3 Managing Director of Predictive Analytics Ihor Dusaniwsky said in a Wednesday note.
“But short sellers still needed to be good stock pickers in order to maximize
their returns,” Dusaniwsky said. “Even on a more macro level, picking which sectors to short produced wildly divergent returns.”
Shorting communications-service stocks on the S&P 500 Index
SPX,
+0.75%
produced a 50.7% return of $80.8 billion, according to S3, while shorting industrial stocks netted a 47.6% return of $95.35 billion.
Meta Platforms Inc.
META,
+2.11%
was the most profitable stock to short, with a 105% gain in 2022, S3 found.
Shorting Google parent Alphabet Inc.
GOOG,
-1.10%
Class C shares produced a 48.1% profit of $2.67 billion, while A-share
GOOGL,
-1.17%
shorts gained 48%, for $1.83 billion. Netflix Inc.
NFLX,
+4.90%
shorts gained 76.3% for a profit of $2.28 billion.
Snap Inc.
SNAP,
+5.08%
was the strongest return with a profit of $2.03 billion, a gain of 182% on the $1.11 billion vested.
As 2022 was wrapping up, S3 said that Tesla Inc.
TSLA,
+5.12%
short sellers had profited $14 billion since CEO Elon Musk agreed to buy Twitter back in April. That rose to $15.85 billion by the end of the year, for a 83.8% gain — the biggest profit by dollar amount. The sector Tesla is included in, however, consumer staples, only produced an 8.7% return for shorts.
Amazon
AMZN,
-0.79%
was in second place with shorts by dollar amount, clawing in $6.36 billion; Meta was in third place, with $5.53 billion; and Apple Inc.
AAPL,
+1.03%
came in fourth, with shorts making $5.35 billion in 2022.
Incidentally, while Twitter was still a public company, short sellers lost $501.56 billion in 2022, a 37.3% loss.
As for the losing short bets in 2022: Shorting consumer-staples stocks produced a 28% loss, while materials stock shorts had a 3.2% loss.
