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Short interest
Also called: short float, shares short, short percent of float
The number of a company’s shares that have been sold short and not yet bought back, usually shown as a percentage of the float.
Explanation
A short seller borrows shares and sells them, hoping to buy them back cheaper. Brokers report open short positions to FINRA twice a month, as of mid-month and month-end settlement dates, and the totals are published about a week and a half later, so the number is always somewhat out of date.
Short interest is usually expressed as a percentage of the float (shares available to trade). Under 5% is unremarkable; over 20% is high and means many investors are betting against the stock, often because they expect dilution, a failed trial or an overvaluation to unwind.
High short interest is also fuel for a squeeze: if the price rises, shorts buying back to limit losses push it higher still. Some short interest is not a bet at all: holders of convertibles and market makers short to hedge.
Why it matters
Short interest shows what skeptical, often well-researched money thinks, and how crowded the trade is. In small caps facing dilution, heavy shorting and a squeeze can happen in the same month.
How Equity Dictionary measures it
The Overview tab’s short-interest tile shows shares short as a percentage of float, with days to cover, from Yahoo Finance market data. Each company’s ownership data also tracks the change from the prior month.
Related terms
- Days to cover: Short interest divided by average daily trading volume: roughly how many days it would take short sellers to buy back their shares.
- Fails to deliver (FTD): Shares that a seller did not deliver to the buyer by the settlement date, which the SEC publishes twice a month.
- Public float: The market value of shares held by non-affiliates, meaning everyone except officers, directors and controlling holders: the SEC’s yardstick for company size.
- Convertible notes: Debt that the holder can exchange for shares at a set conversion price, so a loan today can become dilution later.
Plain-English summary for research; not legal or investment advice.