Red Cat Holdings delivered its fiscal Q4 results on June 18 — and bears wasted no time adding to an already heavy position.
Short interest has climbed meaningfully since the print. It now stands at 26% of the free float, up from the 23.8% flagged in last week's pre-earnings note. That is a roughly 2.2 percentage-point jump in a week — around 1.6 million additional shares borrowed against the float. The ORTEX short score has crept up to 69.1, a fresh high for the recent run and a level that places RCAT in the bottom 4th percentile of its universe on short score rank. Bears have not merely held their ground post-earnings — they have leaned in.
The borrow market has tightened sharply to match. Availability has dropped to 17.9%, nearly half the 34% reading seen before the earnings release. Put another way, for every share still available to borrow, roughly five are already out on loan — the tightest the lending pool has been since late May when availability briefly grazed zero. The cost to borrow has also risen 24% on the week to 1.26%, reversing a multi-week decline. Availability has now fallen 48% in a single week. Despite that tightening, borrowing costs remain a fraction of the near-4% levels seen in early May, so shorts face rising but not yet prohibitive costs to maintain their positions. Options traders, by contrast, are not especially alarmed: the put/call ratio at 0.45 is marginally below its 20-day average of 0.47 and well inside the 52-week range. Call interest continues to dominate, a mild divergence from what the short book is saying.
The Street remains bullish on paper, though the gap between analyst optimism and current price is striking. Five analysts carry Buy ratings, with a mean target of $22 against the current price of $10.18 — implying well over 100% upside on the consensus view. The most recent initiations came from Roth Capital in early June (target $25) and HC Wainwright in late May (target $20), both at Buy. The earnings reaction itself offered little comfort to either camp: the stock fell 5.1% on June 18, the sharpest single-day post-earnings drop in the recent history available. Forward EPS estimates are improving — the 12-month forward EPS growth rank sits at the 86th percentile and the EPS surprise rank at a remarkable 99th — but quality metrics remain a drag, with negative PE and EV/EBITDA multiples reflecting an unprofitable business. The price-to-book multiple of 4.3x is the one valuation anchor that isn't negative.
One insider transaction stands out from the post-earnings window. Director Paul Funk sold 165,028 shares at $11.50 on June 11 for just under $1.9 million — a meaningful disposal at a price now above where the stock trades. That timing, roughly a week before the earnings-day drop to around $10, is worth noting. The CEO's own activity in the same period was negligible: a small award-related sale of 1,570 shares in early April. Major institutions have been adding — BlackRock increased its stake by 2.8 million shares as of May 31, and State Street added 550,000 — but those filings predate the earnings print.
Among close peers, the defense-drone group had a rough week across the board. SPAI fell 9.2% on the week, AIRO dropped 8.9%, and KTOS lost nearly 11%. RDW was the hardest hit at -17.6%. RCAT's own -6.6% weekly decline was softer than most of the group, suggesting the stock did not uniquely underperform its sector peers even after the post-earnings drop. Whether that relative resilience holds as short interest continues to build — now at a multi-week high and still rising — is the central tension heading into the July 27 next reporting window.
See the live data behind this article on ORTEX.
Open RCAT on ORTEX →ORTEX Market Intelligence content is generated by AI from a snapshot of ORTEX's proprietary data. Content is informational only and does not constitute investment advice.
