Space Stock Short Interest: How to Read It

Short interest is the total number of shares of a stock that investors have sold short and not yet bought back, reported as a snapshot on two dates each month. FINRA publishes the reports for every exchange-listed and over-the-counter stock for free. "Days to cover" divides that snapshot by average daily trading volume to show how many days of normal volume it would take to buy back all the shorted shares. Both are slow, backward-looking numbers, so they describe positioning, not a prediction. This is research, not financial advice.

What short interest is#

FINRA's investor guide explains that a short sale is the sale of a stock the investor doesn't own. If the price falls, the short seller can buy it back cheaper and profit; if it rises, they lose money. Investors short for many reasons, such as betting on a decline or hedging other positions.

"Short interest" is a snapshot of the total open short positions on the books and records of brokerage firms for all equity securities on a given settlement date. FINRA says the data covers both exchange-listed and over-the-counter stocks, and that FINRA publishes the reports for the public on its Equity Short Interest data page.

When the data comes out#

According to FINRA's About Equity Short Interest page:

• FINRA Rule 4560 requires member firms to report short positions twice a month.
• The mid-month report uses the settlement date of the 15th (or the previous business day if it falls on a weekend or non-settlement day); the end-of-month report uses the last business day of the month on which transactions settle.
• Firms must report by 6 p.m. Eastern on the second business day after the settlement date, and FINRA publishes the compiled data on the 7th business day after the settlement date.

So the figure you see for the end of the month is a snapshot from roughly a week and a half earlier. In a fast-moving space stock, positions can change a lot in that time.

How days to cover is calculated#

FINRA's data glossary defines it: days to cover is the number of days of average share volume it would take to buy all of the shares sold short during the reporting cycle. Formula: short interest divided by average daily share volume, rounded to hundredths. FINRA shows 1.00 for any value at or below 1, and N/A when average volume is zero. Average daily volume is total volume divided by the trading days between the previous settlement date plus one and the current settlement date.

A hypothetical example, not a real stock: if 20 million shares are short and the average daily volume over the cycle was 4 million shares, days to cover is 20 ÷ 4 = 5.00. A lightly traded stock with the same short position would have a higher number.

Short interest is not short sale volume#

FINRA also publishes a daily short sale volume file, and its investor guide warns they are different. The daily file counts the volume of trades executed as short sales on a given date (off-exchange); short interest counts the positions that remain open on the settlement date. A trader who shorts and buys back on the same day shows up in the volume file but not in short interest. FINRA also notes that some sites redistribute the volume file and call it "short interest", which is incorrect, and that free sites often show their own calculation rather than the raw data. Different providers use different methods, so check how a figure is derived.

Reading it for space stocks#

• Compare like with like. Use the same source and the same settlement date across companies, and note the date.
• Watch the trend, not one print. FINRA's glossary includes the change from the previous cycle, which is more informative than a single number.
• Pair it with float and volume. Space small caps can have low volume, which pushes days to cover up with the same share count.
• Connect it to events. Launches, earnings and lock-up expiries move volume and positions; see our lock-up calendar and Form 4 guide for the other filings that sit alongside it.
• Treat it as sentiment, not a signal. FINRA says it publishes short interest to help investors gauge market sentiment around a security. High short interest may reflect a bearish view or hedging.

Where Martian Alpha fits#

Martian Alpha's Short Interest Tracker ranks the tracked space stocks by short interest as a percentage of float, sorted from high to low, with a plain-language note on what high short interest can mean. It's part of the Space Professional plan ($25 a month); see the plans page. The free glossary defines short interest and related terms. This article does not state how the tracker's figure is calculated; for the official numbers and dates go to FINRA, and compare the two before relying on either.

FAQ#

What is short interest?#

A snapshot of the total open short positions reported by brokerage firms on a settlement date, per FINRA.

How often is short interest published?#

Twice a month, based on the 15th and the last business day; FINRA publishes it on the 7th business day after each settlement date.

What does days to cover mean?#

Short interest divided by average daily share volume, per FINRA: the number of days of average volume needed to buy back the shorted shares.

Is short interest the same as short sale volume?#

No. Short sale volume counts trades executed as short sales on a day; short interest counts positions still open on the settlement date.

Does high short interest mean a stock will go up or down?#

No. FINRA presents it as a sentiment gauge. It can reflect bearish views or hedges, and it's a delayed snapshot.

Sources#

• FINRA, About Equity Short Interest: https://www.finra.org/finra-data/browse-catalog/equity-short-interest
• FINRA, Equity Short Interest Data Glossary: https://www.finra.org/finra-data/browse-catalog/equity-short-interest/glossary
• FINRA, Short Interest: What It Is, What It Is Not (January 25, 2023): https://www.finra.org/investors/insights/short-interest