Qualcomm Inc (QCOM) is up over 23% after the digital wireless communications equipment manufacturer agreed to end all litigation with Apple Inc (AAPL) and agreed on a six year licensing deal and supply agreement.
Short sellers have been decreasing their short exposure in 2019 after a solid 2018 when they were up $1.34 billion in mark-to-market profits, +49.50%. Shorts increased their shares shorted in 2018 by 44.9 million shares and short interest averaged $2.7 billion. In 2019, short sellers reversed course and shares shorted dropped by 45.4 million shares, -72.53%, even though QCOMâ€™s stock price was relatively flat, +0.47%. Short sellers were realizing their longterm profits and lowering their exposure to the Apple litigation.
QCOM is up 23.21% today, and shorts paid a price for an amicable end to the Apple litigation. Shorts are down $228 million in mark-to-market losses today, wiping out the $90 million in 2019 mark-to-market profits they had earned prior to todayâ€™s surprise price move. Shorts are now down $138 million in year-to-date mark-to-market profits in 2019.
Seeing that QCOM shorts were actively covering their positions all year long we should see continued accelerated short covering in the near term, juicing QCOMâ€™s stock price even higher as long shareholders continue bidding up its stock price. This should result in a quick sudden short squeeze for all the shorts left in the trade.
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Managing Director Predictive Analytics, S3 Partners, LLC
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