Top 10 most shorted stocks in the UK
Many traders seek out struggling companies and short their stocks in the hopes of making a profit if share prices fall. Here, we unpack the most shorted stocks in the UK and explain how you can trade them.
How to trade the UK's most shorted stocks
To trade any of the stocks on the ‘UK’s most shorted stocks’ list, you can open a position using a spread bet or contract for difference (CFD). When you go short, you’re speculating that the price of an asset will go down – and if you’re right, you’ll make a profit. If the share price rises, the market is moving against you, which will result in a loss.
If you want to short-sell, you can either use derivative products such as spread bets and CFDs or borrow the stock from a share dealing broker. With us, you’ll use these financial derivatives with leverage – which means that you’ll only need a small deposit, known as margin, to gain full exposure. While your initial outlay is decreased significantly, both your potential profits and possible losses are magnified to the full value of your trade.
That’s why it’s important to manage your risk properly. Further, using derivative products mean you don’t own the underlying shares – you’re simply speculating on their price movements. If you borrow the shares, you’ll aim to sell them, then buy them back at a lower price in the hopes of making a profit. Whether you make the profit or not, you’ll have an obligation to return the borrowed shares to the broker.
Most shorted stocks in the UK
- Kingfisher (6.59% short)
- Ocado group (6.15% short)
- Moonpig group (5.35% short)
- Boohoo group (5.33% short)
- ITM Power (4.94% short)
- Hammerson (4.62% short)
- ASOS (4.38% short)
- Naked Wines (3.92% short)
- Victoria (3.8% short)
- Cineworld group (3.29% short)
The following shares were chosen as the 10 most shorted stocks in the UK by descending order of their percentage weighting for being sold on the market.1 Note that the most shorted stocks in the UK change daily due to normal market fluctuations. For the most recent data, you can visit the FCA short tracker.2
Kingfisher (6.59% short)
Kingfisher is a British multinational retailing firm, with headquarters in London. Despite having over 1300 stores in approximately nine countries, and incorporating brands such as B&Q, Castorama, Brico Dépôt and Screwfix – Kingfisher’s share price fell 14% in the last quarter,3 making it one of the UK’s most shorted stocks.
The caveat to the poor performance is that Kingfisher has been able to grow its earnings per share (EPS) at 300% per year over the last three years, which led to the rise in its share price.3 However, the projected profit margin is 3.6%, which is lower than last year’s 6.4%.4
Ocado group (6.15% short)
Ocado group is an online grocery retail business headquartered in Britain and listed on the London Stock Exchange (LSE). The company entered a joint venture with Marks & Spencer in February 2019, ceding 50% of its UK retail business, Ocado.com.
In 2022, Ocado Group posted a pre-tax loss of more than £500 million, which was more than the £100 million forecasted by analysts. To date, Ocado has been unprofitable and is forecasted to remain so for more than the next three years. This makes Ocado one of the biggest targets for short sellers.
Moonpig group (5.35% short)
Moonpig is a digital company that traffics online greeting card, flowers, and gifts in the United Kingdom. The advent of digital cameras and the adoption of internet into everyday living coincided with the most profitable years of the company.
The success led to Moonpig being bought by Photobox Group in 2011 for a staggering for £120 million in a cash and shares transaction. The deal was short-lived as the two parties severed ties in 2019. Thereafter, Moonpig Group was formed – involving the merger of Moonpig and Greetz – then listed on the LSE.
With the company’s overall market extending to include the UK and Netherlands, its market capitalisation at the end of the first day of trading was over £1.2 billion.
In recent times, the company has gone through times of volatility in the market, presenting an opportunity for traders to short-sell Moonpig stocks. The end of 2022 presented more difficulties for the company, with strikes at Royal Mail leading to Moonpig shares dropping 13%.5 The joint turnover at Moonpig and Greetz fell 8.1% year on year (YoY) to £131.1 million, with consolidated orders dropping 13.3% to 16.9 million.5
Boohoo group (5.33% short)
A key player in the online fashion market is boohoo group. Starting in 2006, the firm has grown rapidly in the fast-fashion space. Post-Covid numbers have put the company’s share price in disarray. Most recently, the group’s revenue for FY22 declined by 11% YoY, prompting boohoo to be tentative about its sales growth in 2023.
This is attributed to the decline in virtual retailers, distribution issues such as supply chain and delivery problems.6 Analyst Panmure Gordon warned that boohoo will not breakeven until its 2024/25 financial year.6 This inditement is one of the reasons why its amongst the most shorted UK companies in 2023.
ITM Power (4.94% short)
ITM Power is a tech giant that manufactures energy storage as well as clean fuel solutions. The company owns the world’s largest electrolyser factory, based in Sheffield, England.
Based on its dominance in the sector, financial institutions have backed its success via owning 53.1% of the company. The rest is divided amongst public companies (18.4%), general public (17.6%), private companies (6.3%) and individual insiders (4.6%),
In 2022, ITM Power’s share price dropped 77%, triggering shareholders and market makers to be concerned. To this effect, institutional investors have cautioned that if the decline persists, they may sell ITM Power.7
Hammerson (4.62% short)
Retail centre owner Hammerson was heavily affected by the Covid-19 pandemic as fewer shoppers set foot in physical stores. The many stores that couldn’t afford their rent also affected Hammerson’s income. This is reflected in the business’s share price movements – but shares had been declining long before lockdown, just like most other stocks on this list.
Reasons include the lower perceived value of retail property and widening losses for the business. For example, one of the properties that Hammerson owns is Birmingham’s Bullring. The estate tumbled towards the end of 2022, dropping from £5.4 billion to £5.1 billion.8
Things are compounded by the lack of confidence in Hammerson turning the tide anytime soon, as rental income has also dropped from £250.4 million in 2021 to £215.2 million last year.
ASOS (4.38% short)
ASOS is a fashion and cosmetics powerhouse focused on e-commerce retail that predominantly targets the youth segment, generating at least 42% of its revenue from the UK. An additional 20% of revenue is derived from special-size categories, in this market and others, where the competition is generally limited.9
The decline of digital retail has been experienced by all e-commerce companies, with pre-Covid numbers hard to come by. Over the last five years, ASOS share price is down 93%.10
Also, the company posted an adjusted pre-tax loss of £87.4 million in the half. During the same period last year, ASOS was making a profit.10 Its hard to see where the help will come from as the net debt of the company has skyrocketed to £432 million. Just last year, during the same period, it was £62.6 million.
Naked Wines (3.92% short)
Naked Wines is a Norwich-based online retailer that connects shoppers with independent wine makers. While Naked Wines benefited from a mass increase in sales during Covid-19 lockdowns, a sobering outlook has followed to the extent that the firm lost nearly 90% of its market value in 2022.
At present, weak demand due to inflationary hikes and the risk of expensive order cancellations are forcing the retailer to consider discounting stock in their warehouse into cash. Margins are also being squeezed by a crippling increase in storage, transportation and logistics costs.
Victoria (3.8% short)
Another company that made the jump from AIM to LSE was Victoria. The company designs, manufactures and distributes flooring products. With headquarters in the UK and Australia, Victoria has fashioned a name for itself providing high-end vinyl tile and hardwood flooring products across Europe and the United States.
The share price has performed considerably well over the last three years, up 230%.11 However, the turn of the year hasn’t been as fruitful for the company. Victoria’s share price dropped 12% in March 2023. This decline was attributed to macro-economic factors that affected consumer spending.
Cineworld group (3.29% short)
As one of the major cinema chains in the world, Cineworld has found it difficult to recover from the pandemic slump experienced by the entertainment industry. With streaming services offering an alternate viewing experience, Cineworld’s share price has been dwindling over the last five years, dropping 99%.12
This has led to movie chain filing for bankruptcy in the United States in 2022, while receiving no all-cash offers that would save the company in 2023.12 With the company looking for potential suitors to bring it back to its former glory, many traders choose to short sell in its current form.
Short-selling stock examples
Let’s look at a few short-selling examples, to see how you can use this strategy to try and profit from a company’s falling share price.
Shorting stock with spread bets example
If you choose spread betting, you’re simply betting on the direction in which the market will move. Say XYZ shares are trading at $68.5, with a sell price of $68.45 and a buy price of $68.55. You think the XYZ share price will fall, so you go short at $50 per point of movement at the sell price of $68.45.
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If the share price goes down
Let’s say the market moves in your favour after two weeks, and the share price drops to $60.5 with a sell price of $60.45 and a buy price of $60.55. You decide to close your trade, and get $50 for every point the price moved down – which means you’d have made $395 in profit ([$68.45 – $60.55] x $50).
With spread betting, you won’t have to pay any tax on your profits, or commission to open the position. However, you’ll have to pay funding charges if you keep your position open overnight.
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If the share price goes up
If the XYZ share price moves against you – in other words, it goes up – you’ll lose $50 for every point the market moves against you. Assume the new share price is $71.5 after two weeks, with a sell price of $71.45 and a buy price of $71.55. If you close the trade at the new buy price, you’ll incur a loss of $155 ([$68.45 - $71.55] x $50), plus any overnight funding charges.
Shorting stock with CFDs example
If you choose CFD trading, you’ll be exchanging the difference in price of the stock from when the position is opened to when it is closed. Let’s say the underlying market price of XYZ shares is $68.5 a share, with a sell price of $68.45 and a buy price of $68.55. You decide to short sell 100 shares.
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If the share price goes down
If the share price moves in your favour after two weeks and goes down to an underlying price of $60.5, with a sell price of $60.45 and a buy price of $60.55, you’d stand to profit. Suppose you decide it’s time to reverse the trade, so you buy the shares at the new price of $60.55. Your profit on this trade will be calculated as ([$68.45 – $60.55] x 100), which equals $790.
Note that you’ll also need to pay a commission fee, any overnight funding charges, and capital gains tax on your profits.
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If the share price goes up
Let’s assume that the market has moved against you after two weeks and is now trading at $71.5 with a sell price of $71.45 and a buy price of $71.55. You decide to close your position. The calculation of your loss is ([$68.45 – $71.55] x 100), which gives you a loss of $310, in addition to your commission fee, and any overnight charges.
How to use shorting data
You can use shorting data – the details surrounding the most shorted stocks – to identify the companies in which investors have the least confidence. This should be an indication that markets aren’t doing well and share prices might fall – or continue to fall. Ensure you carry out thorough technical and fundamental analysis, including shorting data, before deciding to buy or sell shares.
Footnotes
1 This list was updated according to the data pertinent to 08 May, 2023
2 FCA, 2023
3 Yahoo Finance, 2023
4 Simply Wall, 2023
5 Forbes, 2023
6 Business Live. 2023
7 Simply Wall St, 2023
8 This is Money, 2023
9 The Telegraph, 2023
10 The Motley Fool, 2023
11 Simply Wall St, 2023
12 CMC Markets, 2023
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
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