Short interest in the stock market is an indicator that investors think that the value of a stock is likely to fall. When short interest is up, chances are higher that the value of a stock will decline. After all, investors move the market so what the overall opinion of investors is ultimately becomes a self-fulfilling prophesy. With that said, Gilead Sciences short interest is up in a big way. Today, we’ll talk about the short interest around GILD, why I don’t believe it’s justified, and what we can expect to see moving forward. So, let’s get right to it.
Gilead Sciences Short Interest Climbs
In the month of August, shares of Gilead Sciences proved to be the target of a big spike in short interest. As of August 14th, short interest came to a total of 21,727,751 shares. That’s up from 18,735,885 shares on July 31st – a 16% increase. Based on these numbers, the days-to-cover ratio, and the average trading volume on the stock, we can determine that about 1.5% of Gilead Sciences’ shares are short sold.
Why I Don’t Believe This Is Justified
In my humble opinion, an increase in short interest around GILD is definitely an unjustified change. There are just so many reasons to be excited about what we’re going to see from GILD moving forward that it doesn’t make sense to expect declines. First and foremost, as I’ve said time and time again, the company’s dominance of the HCV treatment space is compelling to say the least! Even in the face of heavy competition, they have done a great job of holding their position at the top. Aside from HCV, Gilead Sciences also has an incredible presence in the HIV space and is continuing to innovate new treatments in a wide array of indications.
Why I Think We’re Seeing The Increase
Personally, I think that the short interest increase isn’t targeted solely at Gilead Sciences. Last week proved to be a rough week for the market and today is bringing the market down as well. After all, the Dow Jones Industrial Average is currently down by more than 300 points! So, I think that the short interest increase has more to do with current market conditions than it has to do with Gilead Sciences as a particular stock.
What We Can Expect Moving Forward
As mentioned above, investor opinions tend to become self-fulfilling prophecies in the market. With that said, I am expecting to see declines in GILD. However, I don’t think that those declines are likely to last long. I would imagine that as market wide turbulence fades out, so too will short interest on Gilead Sciences.
What Do You Think?
Where do you think GILD is headed and why? Let us know in the comments below!