Short interest rises in communication services stocks as sector rallies

Short sellers boosted their bets against communication services stocks in March as the sector recorded market gains that outpaced a broader rally.

Short interest in communication services stocks jumped to 3.70% as of mid-March, up 22 basis points from the end of February, the largest jump of any sector, according to the latest data from S&P Global Market Intelligence. Short interest in communication services stock in mid-March was the highest since mid-June 2023.

The S&P 500's communication services sector increased more than 11.1% from the end of 2023 through mid-March, the most of any sector over that stretch. The broader S&P 500 increased about 7.3% over the same period.

Sector breakdown

Within the communication services sector, Gaxos.ai Inc. was the most shorted stock, with short interest of 29.61%, up from just 0.2% at the end of 2023.

The company, a developer of artificial intelligence applications, was notified by Nasdaq in July 2023 that its common stock had failed to maintain minimum bid requirements. It received notice on March 22 that it had regained compliance and would continue to be listed on the index.

Earlier in March, Gaxos.ai completed a 1-for-12 reverse stock split.

Alternative carriers had the most short interest among communication services segments as of mid-March, at 5.51%, up from 5.48% at the end of 2023.

Movies and entertainment were the second-most shorted subsector within communication services, at 4.35% as of mid-March, down from 4.47% at the end of December 2023.

Overall most shorted

Ault Alliance Inc. was the most shorted stock as of mid-March with short interest of 48.86%, up from 4.08% at the end of 2023.

On March 13, Ault Alliance announced it was ending at-the-market sales of its stock for the foreseeable future and planning to restructure ownership of its operating businesses.