Short interest in Alibaba Group Holding Limited (BABA ) has grown since the Chinese e-commerce giant’s September 2014 initial US public offering raised $25 billion. Short sellers are those who sell Alibaba shares that they do not own in the anticipation that the share price will decline. (They expect to buy the shares at a lower price to fulfill their earlier sale and thereby make a profit as they pocket the difference.) Even though the e-commerce company has seen its share price rise from the IPO price of $68 per share to touch the $100 mark, short interest in the stock nearly doubled from more than 20 million shares in September to north of 40 million shares at the end of 2014.

This short interest comes even as investors are betting on the e-commerce giant and its business model of enabling merchants to set up an e-commerce presence, on both online and mobile platforms. In addition, most investors see the vast potential of growing Chinese consumerism. However, for those who would still like to bet against the company, there are certain aspects to watch for that could indicate the stock will decline in the near-term.

Earnings Releases

Watch for Alibaba’s quarterly earnings release. This will provide input on the company’s financial performance, including information on the company’s revenues, earnings per share, and profit margins. Investors and analysts use such fundamentals to take a view on the company’s long-term prospects. If the company has performed worse than analysts and investors expected and/or if there is any decline in such metrics, these could cause a pullback in stock price that short sellers could benefit from.

Analyst Opinions

Another factor that could cause the stock price to decline is if a major research firm changes its opinion about the company’s prospects. Firms such as Oppenheimer & Co. Deutsche Bank, RBC Capital Markets, Barclays, and UBS all follow BABA and have all weighted in positively. If any of them change their mind about the stock and downgrade their rating, that could be a cue for short sellers as this could cause the stock to decline in the short-term.

Technical Indicators

Short sellers could also watch out for patterns in the Alibaba stock price that could show a downtrend. This, in conjunction with fundamental factors, could indicate a good time to short the stock. One such pattern is a so-called “head and shoulders ” pattern. On charting the Alibaba stock price, if you see such a pattern, the tops of the pattern could be evidence that the stock price is going to fall.

Insider Activity

If a number of insiders who own the Alibaba stock decide to sell, it could be an indication that they believe that the stock is going to fall. However, it could just be that the insiders are selling to liquefy their holdings to meet their need for money. At the time of the Alibaba IPO, insiders and early investors in the company owned more than 80 percent of the stock. About 16 percent of the equity held by some insiders and institutional investors is locked up for a six-month period. This group is free to sell its holdings of more than 300 million shares in March 2015. If they do sell a good number of shares at that time, it could cause the price to decline.

Another group of shareholders, accounting for more than 50 percent of the Alibaba shares, has a one-year lockup period on its holdings. This group, including Yahoo! Inc. (YHOO ), SoftBank Corp. and Alibaba Chairman Jack Ma, could begin to sell in September 2015. With about 1.8 billion shares free to be sold at that point, that is another timeframe to watch for possible share price declines.

The Bottom Line

Shorting a stock is a risky proposition. Shorting the stock of Alibaba, a company with a sound business model that compares favorably to others in the same sector such as eBay, Inc. (EBAY ) and its compatriot Baidu (BIDU ), is certainly risky. While it makes more sense to be long on the stock, temporary shorting could be a way to benefit from the inevitable price dips along the way.