Viavi Solutions enters July with a curious split: short interest jumped 34% in a single week while the borrow market remains among the loosest it has ever been — a combination that tells you new shorts are arriving in force, but aren't worried about getting squeezed.
The short interest story is the lead this week. At 6.1% of free float, the position is meaningfully large — but the weekly surge to 13.7 million shares short is the headline. That 34% week-on-week jump in shares short is a sharp move for a name this size. The timing is notable: the stock fell 4.4% across the week while close peers ran in the other direction. Lumentum gained 3.6% on the week. Sievert Laryngoscope surged 16%. Ciena added 6.7%. VIAV, by contrast, closed at $47.75 — sitting roughly 25% below the analyst consensus target of $64.57, a gap that widened rather than closed this week.
The borrow market offers no friction to the bears. Availability is extraordinarily loose at roughly 2,932% — meaning the lending pool holds nearly 30 times the shares currently being borrowed. That is the highest availability reading of the past 30 days and well above last year's trough of 454%. Cost to borrow is negligible at 0.40%, down slightly on the week, confirming that there is no shortage of supply for anyone wishing to add to the short. Options positioning edged modestly more defensive — the put/call ratio ticked to 0.51, about 1.2 standard deviations above its 20-day average — but nothing in the options market looks alarmed. The ORTEX short score of 38.2 is mid-range and has actually drifted lower since a brief spike to 43 on June 25, suggesting no extreme short-side conviction on the scoring model.
The Street remains broadly constructive, which makes the short build harder to explain away. Susquehanna lifted its target from $65 to $66 on July 1, maintaining a Positive rating. Rosenblatt holds a Buy with a $70 target. UBS is the outlier on rating, sitting at Neutral with a $60 target — though even UBS nearly doubled its target after the April earnings print. That print was extraordinary: the stock moved 21% the next day and added another 12% over the following five days. The next event is August 6. Bulls point to accelerating demand for 5G network test and assurance, plus PNT and optical security as diversification levers. Bears flag execution risk on the 800G opportunity and supply-chain dependence. Valuation multiples have compressed modestly — the P/E has dropped about 3 points over the past month to 43x, and EV/EBITDA sits at 28.3x — but neither is historically cheap.
Insider activity adds a layer of caution. CEO Oleg Khaykin sold roughly 260,000 shares across May 6-8 at prices ranging from $51 to $54, collecting over $15 million in proceeds. The net 90-day insider flow is positive in share terms only because of stock award grants to the COO in late May; the cash transactions skew heavily toward selling. Khaykin still holds 1.19 million shares, but the volume of selling at prices above current levels is worth noting as the stock has since drifted lower.
The setup heading into August 6 earnings is therefore an unusual one: analysts are raising targets, the borrow market is open and cheap, short interest just jumped sharply, peers are outperforming, and the CEO has been a net seller at higher prices. Whether that short build reflects a specific thesis on August guidance, a pairs trade against the names that rallied this week, or something else entirely is what to watch as the position either builds further or unwinds ahead of the next print.
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