With issues of privacy, security, and unfair market positioning surrounding a number of the FAANG stocks, plus the fact that some of them faced recent selling pressure, we were surprised last week to see that the average short interest as a percentage of float (SIPF) for the five stocks that make up FAANG (Facebook, Amazon.com, Apple, Netflix, and Alphabet) remains right near record lows. That’s right, the average SIPF level for these five names is just 1.83%. Perhaps even more surprising is that their average short interest level is half the average of the S&P 500 (3.67%).
Times have really changed for the FAANG stocks over the last several years. Back in late 2012, when Facebook first went public, the average SIPF level for the FAANG stocks was around 10%. Since then, short interest has steadily declined. October 2013 was the first time that short interest for the FAANGs dropped below the S&P 500, but it wasn’t until November of the next year that short interest stayed there and continued to decline. The fact that short interest levels are so low for the FAANG stocks isn’t entirely surprising. For starters, these are now among the largest market cap stocks in the world, and it is common for mega-cap stocks to have lower than average short interest levels as it takes a lot more capital to short a meaningful percentage of the company. That being said, there certainly seems to be a shortage of skepticism regarding these names.