Copart shorts ease but cost to borrow spikes

Copart heads into the back half of the week with an unusual divergence: short sellers are quietly reducing their bets, even as borrowing costs hit a 30-day high and the stock rebounds from a difficult month.

The most eye-catching move in the lending market is the cost to borrow, which jumped 44% in a single session on July 7 to 0.71% — the highest level in over a month, and up 38% on the week. Yet borrow availability tells a completely different story. There is essentially no constraint on new shorts entering the trade: availability is at the maximum reading, with more than 457 million shares available to lend against roughly 38 million short — a ratio so loose it barely registers as a squeeze risk. Short interest itself fell 3.3% over the week to 3.96% of the free float, continuing a gentle unwind from the 30-day peak near 4.1% hit at the end of June. The days-to-cover figure from the most recent FINRA filing sits at 3.9 days. Options positioning is mildly more defensive than usual — the put/call ratio is running at 0.56, above the 20-day mean of 0.46, though still well within normal range at less than one standard deviation above average and far from the 52-week high of 1.14. The overall picture is one of shorts trimming and borrowing costs ticking up, without any meaningful squeeze dynamic in play.

The Street's debate on Copart is not particularly tight. The mean analyst price target of $40.90 implies roughly 40% upside from the current $29.27, which looks like a wide gap. However, it partly reflects stale coverage: the most recent major moves came from JP Morgan and Barclays in February, both of which trimmed targets — JP Morgan cut to $34 while staying Neutral, Barclays held Underweight at $32. A small broker initiated with a $39 Buy in late June. The consensus divergence factor score ranks in the 99th percentile, meaning the gap between the current price and analyst targets is unusually large by historical standards, though that can reflect stale targets as much as genuine upside optionality. On valuation, the trailing P/E has drifted down to around 17.6x, off roughly 11% over the past month — consistent with the stock's 5.5% decline over 30 days to close at $29.27. The EV/EBITDA of 11.2x has been rising modestly. The bear case centres on depressed unit growth and softening gross transaction values; the bull case points to a 5.6% jump in global average selling prices last quarter and international buyers now accounting for 38% of auction units.