Short sellers boosted their positions against communication services stocks through late January amid a broader pullback as equities rallied.

Short interest in communication services stocks was at 3.78% at the end of January, up from 3.67% in mid-January and a recent low of 3.55% at the end of November 2022, according to the latest S&P Global Market Intelligence data.

The boost came as communication services stocks rallied early this year. The S&P 500 communication services sector increased by nearly 12.7% in January, compared to the 6.6% increase in the broader index.

Short interest, which measures the percentage of outstanding shares held by short sellers, averaged 2.23% for the S&P 500 at the end of January. Short interest in consumer discretionary stocks, the most-shorted sector in 2022, fell from 5.70% in mid-January to 5.56% at the end of the month.

Sector breakdown

Short interest varied throughout the communication services sector.

The movies and entertainment industry was the most shorted in the sector at 5.77% at the end of January. Alternative carriers, and cable and satellite stocks were the next most-shorted industries, at 5.75% and 5.06%, respectively.

Most shorted

Grom Social Enterprises Inc. — which calls itself a family-friendly entertainment, technology and social media company — was the most-shorted communication services stock at the end of January with short interest of 56.5%. The stock has fallen roughly 40% since the start of the year.

Down from peak

While short interest in communication services stocks did increase at the end of January, short interest in the sector has fallen from its peak of 4.75% in mid-March 2022. Short interest in consumer discretionary stocks is also down from a 6.52% mid-November 2022 peak.