AXT, Inc. arrives at its July 30 earnings print with the internal contradiction that defined the past two weeks finally resolving — in one direction at least.
The short position has started to unwind. Bears held 25.2% of the free float as recently as mid-July, the highest conviction level in months and the lead angle of the two previous notes. That number has slipped to 24.4% — still heavy by any measure, but the daily estimate on July 21 clocked in at 10.94 million shares, down from the 11.75 million peak on July 17. The ORTEX short score has followed the same path: it peaked at 57.5 on July 17 and has since eased back to 52.5, a week-on-week retreat that suggests some bears are trimming ahead of the event rather than adding. The month-on-month picture still shows a 48.6% build in short shares — the structural bearish thesis has not gone away — but the sprint phase flagged in last week's note does appear to be cooling.
The borrow market continues to offer shorts an easy ride. Availability is wide at 415%, up from 374% two weeks ago, meaning there are roughly four shares sitting in the lending pool for every one already borrowed. Cost to borrow is negligible at 0.52% — a 30-day high but still barely above zero in absolute terms. With the 52-week trough in availability at 204%, there has never been meaningful borrow friction on this name, and this week is no different. No squeeze mechanic is present in the lending market heading into earnings.
Options tell a sharply different story, and the shift has been rapid. The put/call ratio has collapsed to 0.54, more than 1.4 standard deviations below its 20-day average of 0.76. A month ago the PCR was running above 1.0 — heavy put demand, defensive positioning. Now call buyers dominate, running at their most aggressive pace of the past year. The stock's 15.7% single-day gain on July 21 may have driven some of that repositioning, but the trend in the PCR has been grinding lower since late June, well before Tuesday's bounce. Options traders are positioned for upside; the short book is positioned for the opposite.
Tuesday's 15.7% surge — which the prior week's note flagged as a volatile bounce following the earnings-related guidance warning — came against a backdrop of insider selling that peaked well above current price levels. The most notable cluster involved CEO and founder Morris Young, who sold 123,601 shares on June 2 at roughly $113, and Lead Independent Director Jesse Chen, who sold repeatedly through June at prices ranging from $87 to $115. With the stock now at $56.51, those sales look well-timed in hindsight. Against that, institutional ownership data shows Jane Street added 2.36 million shares as of late April, and Marex nearly doubled its position to 4.0 million shares — flows that suggest some large participants were buyers into the prior rally even as insiders were exiting. The analyst picture has been stale since early June (latest as_of: June 3), but Wedbush maintained Outperform with a $93 target after the April earnings print, while B. Riley sits at Neutral — a split that broadly mirrors the bull/bear standoff visible across the positioning data. The bull case rests on InP product growth and capacity expansion; the bear case on China revenue concentration and the uncertain export permit environment flagged in prior coverage.
With nine days to the July 30 earnings release, the number worth watching is whether that short book continues its controlled unwind or reverses course. The prior print — April 30 — produced a 35% single-day move and a 52% five-day gain. That history frames the stakes for both sides.
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