AMD stock recovers from sharp drop, but firmly in correction to relief of short sellers
Advanced Micro Devices Inc. shares bounced back from a brief journey into bear country to close at a narrower loss Wednesday as the highflying stock was firmly planted in correction territory and beleaguered short sellers found some relief.
shares, which had been off by nearly 9% after the market open, closed down 2% at $28.43. In comparison, the PHLX Semiconductor Index
finished up 0.1% and the S&P 500 index
closed up less than 0.1%.
As is the case on most days of late, AMD’s stock was the most actively traded on the S&P 500 at more than 189 million shares exchanging hands by the close, and has the second-highest average daily volume over the past 52 weeks at 70.7 million shares, just below shares of General Electric Co.
AMD’s drop at the beginning of trade down to an intraday low as $26.54 put the stock down by more than 22% off its intraday high of $34.14 set on Sept. 13, back when analysts were falling over each other to put a $40 price target on the stock. Currently, shares are nearly 17% off recent highs, placing the stock firmly in correction territory.
Shares pulled back sharply after one analyst downgraded AMD to a neutral rating on Monday, and rival Intel Corp.
said on Friday it expected to meet its full-year outlook even with supply constraints. Intel shares, which tend to run counter to AMD shares, finished up 1.4%.
Read: AMD vs. Intel: Balance of chip maker power appears to shift
Welcoming the price drop are short sellers who have been confounded all year. With the recent selloff, short sellers have recouped about $497.2 million on paper since mid-September, according to Matthew Unterman, director at S3 Partners. But, keep in mind, short sellers were also down $3.3 billion in year-to-date mark-to-market losses when the stock hit its high for the year.
Read: AMD short sellers gutted by ‘stealthy short squeeze’
Currently, 131.8 million AMD shares are shorted, or 14.2% of its float, for $3.83 billion at risk betting the stock will fall further, according to S3. That’s down from 151.9 million shares, or 17.7% of the float, back in mid-September. In April, short positions reached a record of 198.2 million shares, or more than 20% of the float.
Even so, a correction in AMD shares isn’t all that surprising seeing that the stock is still the best performing on the S&P 500 year-to-date with a 177% gain, with the next best being Abiomed Inc.
with a 128% gain and Netflix Inc.
with a 96% gain.
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