Why this matters: Three distinct signals are aligning on ARM in the same direction. Short sellers are reducing exposure. Call buyers are dominant in the options market. Borrow costs are rising even as the lending pool stays well-supplied. The setup is unusual — and it arrives four weeks before July 29 earnings.
The short-covering that began in late June has continued. Short interest fell another 12% in the week to June 30, dropping to 16.9 million shares. That follows the 2.2-million-share cover reported in the previous ORTEX note. Since the peak above 19.2 million in mid-June, roughly 2.3 million additional shares have been covered.
The borrow market tells a consistent story. Availability stands at 196% — roughly two shares available for every one currently borrowed. That is ample supply. Yet cost to borrow has still jumped 67% over the past week to 0.82%. The rate remains low in absolute terms. But a sharp CTB move into a well-supplied pool suggests incremental demand for borrows, even as headline short interest falls. New shorts are initiating while older positions close.
The put-call ratio on ARM sat at 1.20 on July 1. That looks elevated in isolation, but it is 1.6 standard deviations below its 20-day mean of 1.24. Put options are cheap relative to calls by recent standards. Call demand has been the dominant driver.
The 52-week PCR range runs from 0.78 to 1.35. The current reading is in the lower third of that range. Traders positioning through options are leaning bullish — or at minimum, they are not paying up for downside protection.
ARM is down 6% over the past week and 4.8% on the latest session, trading at $337.47. The stock has now given back most of the move from $334 that followed the initial post-selloff bounce.
The analyst backdrop has not shifted. TD Cowen raised its target to $475, UBS to $470, and BofA to $460 — all in the week of June 24, all into the weakness. The consensus mean of $297 lags those fresh targets significantly. At $337, ARM now trades above the consensus mean but well below the most active recent target levels. The lone downgrade — New Street Research to Neutral on June 18 — remains the only dissenting voice at the top of the house.
The bull case centres on a 20% royalty revenue CAGR through 2031 and a $15 billion CPU revenue opportunity by fiscal 2031. The bear case flags SoftBank dependency and the risk that rising royalty rates alienate existing customers.
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Open ARM 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.
