USA Rare Earth heads into the second half of June with a striking divergence: short sellers are rebuilding positions at pace, yet options traders are more bullish than they have been all year.
Short interest is the clearest tension in the setup right now. It has climbed nearly 10% over the past week to 16.8% of the free float — roughly 22.3 million shares — recovering from a month-long retreat that had trimmed it from a late-May peak near 22.8 million. The rebuilding is happening as availability tightens sharply. Borrow availability dropped to 33.8% — meaning only one share remains available for every three already lent out — almost halving in a single week from 65.8%. That follows an extraordinary spell in late May when availability fell as low as 4.3%, near the 52-week trough of 0.1%. Borrow costs tell a different story: at 0.55%, cost to borrow has fallen roughly 37% over the past month, well off the sub-1% levels that prevailed in May. Shorts are piling back in, but they are doing so while borrow is cheaply available — for now.
Options positioning cuts directly against that bearish lean. The put/call ratio has dropped to 0.56, more than two standard deviations below its 20-day average of 0.63 — the most call-heavy reading this ratio has registered in the past year, which hit a floor at 0.196 during an earlier bullish spike. Call buyers have been systematically dominant for three consecutive weeks, with the PCR trending down from 0.69 in mid-May. That is not hedging behaviour. It reads as directional positioning to the upside.
The Street broadly agrees with the bulls. Every analyst covering USAR carries a Buy or Outperform rating, with a mean price target near $39 — implying close to 70% upside from the current $22.89 print. Needham initiated coverage at Buy with a $39 target on June 1, and Cantor Fitzgerald lifted its target to $35 in mid-May. The bull case centres on vertically integrated domestic supply, geopolitical tailwinds as the US moves to reduce rare-earth dependence on China, and strong government support. Bears counter that the company remains pre-profitability: the EV/EBITDA multiple is running near 60x and the PE ratio is deeply negative at -88x, reflecting a business still burning cash. The EPS momentum factor scores rank in the 5th percentile over 30 days and 7th over 90 days — the Street's optimism is based on future potential, not recent results. The EPS surprise score at the 86th percentile suggests the company has beaten modest expectations, but analyst recommendation divergence at the 94th percentile signals this is still a conviction call rather than a consensus trade.
Institutional flows add a layer of nuance. BlackRock and State Street both added heavily to their positions as of end-May, with BlackRock building by nearly 7.7 million shares and State Street by over 7 million. That passive-flow addition likely reflects index rebalancing as USAR's float expanded. More meaningful is Alyeska Investment Group, a known active manager, cutting its position by 3.6 million shares as of mid-May — a deliberate reduction into what was then a stronger tape. Insider activity is mixed: the CFO sold $763,000 of stock in late May, and an independent director followed with a smaller $296,000 sale in early June. Both sales occurred around the $22-23 price range the stock is trading at today.
Earnings history compounds the caution. The last two prints both produced negative reactions: the June 3 event saw the stock fall 11.7% on the day and 33.8% over the following five sessions. The May 14 event produced a smaller 4.1% one-day drop. The next earnings date is August 11. Between now and then, the key tension to watch is whether the continued short rebuilding — already back near multi-week highs — eventually collides with the tightening borrow availability to create renewed squeeze pressure, or whether the post-earnings supply of shares-to-borrow keeps conditions loose enough for shorts to hold their ground.
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