Dow Inc. arrives at its Q2 earnings call on July 23 with the analyst and short-seller communities already having delivered their verdict — and neither is flattering.
Since the earnings preview published two days ago, the positioning picture has sharpened rather than softened. Short interest held nearly flat on the week, slipping just 0.4% to 4.87% of the free float — but the month-on-month build of 33% remains the defining fact. That 30-day accumulation, from roughly 26 million shares short in late June to 34.6 million today, is not noise. It is a deliberate repositioning ahead of a print that most of the Street expects to disappoint. Days to cover is 2.5, so there is no immediate squeeze pressure — but the borrow market is deeply loose, with availability running near 5,800% of short interest, meaning there is no friction stopping further additions if the report underwhelms.
The cost-to-borrow spike is worth flagging separately. At 0.47% it remains low in absolute terms, but it has jumped 66% on the week — an unusual move for a liquid large-cap name. That kind of intraweek CTB acceleration typically reflects a burst of new borrow demand. Combined with the flat-to-stable short interest, it suggests shorts are rolling and repricing existing positions rather than adding aggressively at the margin, a sign that the short thesis is being maintained rather than abandoned.
Options traders are holding a mildly defensive lean. The put/call ratio is running at 1.05, just above its 20-day average of 1.03 — a z-score of 0.28, so far from extreme. What is notable is the direction of travel: the PCR peaked near 1.19 in mid-June and has drifted lower through July, coinciding with the stock's modest recovery from below $30 to $30.47. That suggests some of the most acute downside hedging has been unwound, even as short interest remained elevated. The setup is cautious but not panicked.
Morgan Stanley trimmed its target to $39 from $41 yesterday, maintaining Equal-Weight — a fresh action from a bellwether that reinforces the directional consensus. Every major firm has now cut targets in the past three weeks, as detailed in the earlier preview. The mean target at $36.81 implies around 21% upside from current levels, but given RBC's downgrade to Sector Perform with a $28 target and BofA's Underperform at $29, the range of outcomes the Street is pricing spans below the current price to well above it. Bulls point to anti-dumping tailwinds in polyethylene, siloxanes pricing recovery, and the accelerated cost-reduction program. Bears counter with weak industrial volumes, persistent margin compression, and tariff-driven uncertainty. The factor scores tilt the tie toward bears: EPS momentum over 30 days ranks in just the 5th percentile, even as the 90-day figure sits at 97th — a split that reflects estimates having been cut hard recently after a period of sharp upward revision. Analyst recommendation differential ranks in the 4th percentile. The short score at 37.8 has crept higher every session this week, though it remains in the lower third of its range.
Close peer LYB rose 4.5% on the week, outpacing DOW's 0.5% gain. OLN added 6.9%. The sector is not uniformly weak — which makes DOW's relative underperformance more company-specific than macro-driven, consistent with the bear thesis around Dow's particular exposure to ethylene and polyethylene pricing cycles. The Q2 print tomorrow morning will be the first hard data point to either validate or pressure-test that view.
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