4DMedical Ltd (ASX: 4DX) and DroneShield Ltd (ASX: DRO) shares are headed in opposite directions today. Which will come as mixed news to the growing cadre of short sellers betting against the two stocks.
4DMedical shares closed yesterday trading for $4.40. In morning trade on Tuesday, shares in the S&P/ASX 200 Index (ASX: XJO) respiratory imaging technology company are changing hands for $4.30 apiece, down 2.3%.
DroneShield shares closed yesterday trading for $2.18, with shares in the ASX 200 drone defence stock currently trading for $2.21 apiece, up 1.4%.
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4DMedical and DroneShield shares top the most shorted list
If you've been keeping an eye on our most shorted ASX shares list, you'll know that DroneShield shares are the most shorted this week, with a short interest of 15.1%.
4DMedical shares have the ignominious honour of being the second most shorted on the ASX, with a short interest of 13%.
Short sellers – who make money when a company's share price falls – are largely targeting the two companies over valuation concerns.
Now, depending on when investors bought shares in these stocks (or when they opted to short sell them), they may have made or lost a lot on that investment.
Despite having tumbled 36.8% from the 10 April record closing high of $6.80, 4DMedical shares remain up 795.8% since this time last year.
DroneShield shareholders have had a tougher time of it (though generally not those short sellers). Shares in the drone defence company have plunged 66.5% since the stock closed at its own record high of $6.60 on 9 October and are down 44% since this time last year.
However, if you'd bought DroneShield stock at the market closing price of $1.695 a share on 31 July, you'd be sitting on a gain of 30.4% today. (Or a hefty loss for recent short sellers.)
Looking ahead, however, Plato Investment Management's Dave Allen believes the ASX 200 stocks have further to fall, with Allen holding short positions in both.
Why these ASX 200 shares could have further to fall
Commenting on the short position he recently opened on 4DMedical shares, Allen compared the valuation to Elon Musk's space company.
"At a market capitalisation of around $2.5 billion and revenue of less than $6 million, the stock makes SpaceX look cheap," he said (quoted by the Australian Financial Review).
"Anything less than flawless execution and rapid commercialisation will see 4DMedical's share price come under intense pressure," he added.
As for his short position on DroneShield shares, which he noted provided disappointing full-year 2026 guidance, Allen said, "Turning sentiment will take time, and we think the share price could still have more to fall before any sustained recovery."
Sounding a word of caution for investors considering betting against DroneShield, VP Capital's John So said:
DroneShield has already sold off meaningfully, and while it hasn't landed the large contract wins some offshore drone-defence peers have, it would only take one surprise contract to trigger a rebound.
