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.
AMD
AMD, -2.03%
shares, which had been off by nearly 9% after the market open, closed down 2% at $28.43. In comparison, the PHLX Semiconductor Index
SOX, +0.11%
finished up 0.1% and the S&P 500 index
SPX, +0.07%
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.
GE, +1.30%
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.
INTC, +1.37%
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.
ABMD, -0.64%
with a 128% gain and Netflix Inc.
NFLX, -0.02%
with a 96% gain.
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