ARM reported earnings on July 29 and the market's immediate verdict was brutal: the stock closed Tuesday at $244.74, down 8.1% on the day and off 15.5% for the week, extending a slide that now amounts to a 27% drawdown over the past month from levels above $330.
The earnings reaction is the central fact this week. Prior notes tracked a complicated pre-print setup — bears trapped offside, a late call-heavy options rotation, and then a sharp reversal back to $260 the day before the report. The actual print resolved that tension to the downside. The stock is now trading nearly $70 below where short sellers who rebuilt positions in the $315–$323 range originally entered. That cluster of shorts, flagged in earlier notes as deeply offside, has now been partially vindicated by the move — though anyone who covered into the July rally gave back much of their gain before the stock resumed falling.
Options positioning has shifted to a more neutral stance, though the precise reading is interesting. The put/call ratio has actually dropped to 1.17, running about two standard deviations below its 20-day average of 1.22 — which means the post-earnings options market is tilted toward calls rather than puts. That is a counterintuitive setup for a stock that just fell 8% in a session and 27% in a month. The most likely explanation: participants are buying calls as cheap lottery tickets on a recovery bounce, rather than expressing genuine bullish conviction. The PCR's 52-week range runs from 0.79 to 1.35, so the current 1.17 reading remains in the upper half of historical norms despite the z-score signal.
The borrow market is relaxed, and that relaxation is itself a signal. Cost to borrow has eased 22% over the week to 0.43% — the lowest level in over a month. Availability has actually loosened to 283%, up from around 265% a week ago, meaning there are now nearly three shares available to lend for every one currently out on loan. Short interest ticked up fractionally week-on-week, by 2.8%, to roughly 17.5 million shares — but the 30-day trend remains down about 9%. Bears who want to press the trade here face no practical borrowing constraint. The absence of any borrow squeeze, combined with the falling cost to borrow, suggests the post-earnings decline is being driven by holders selling rather than a fresh wave of short selling.
The Street walked into earnings already adjusting its goalposts. Wells Fargo lowered its target from $410 to $350 the week before results. UBS cut from $470 to $360. HSBC downgraded outright to Hold, raising its target to $315 from $255 — a rare case of a downgrade accompanied by a price increase, signalling concern about valuation rather than fundamentals. Against those revised numbers, the consensus mean target now stands at around $303, still roughly 24% above the current price. The forward 12-month EPS growth score ranks in the 91st percentile across the universe — the fundamental growth narrative has not collapsed. But the EV/EBITDA multiple has compressed sharply, falling more than 8 points over 30 days to 75x, and the P/E has dropped 40 points over the same period to 91x. These are still elevated multiples for a stock this far off its highs. The short score sits at 57 — a mid-range reading that has barely moved despite the price carnage, consistent with a stock where borrow is easy and the short base is not building aggressively.
SoftBank's 86% ownership stake remains the structural backdrop that limits how freely the float can reprice. With only 13.6% of shares in public hands, the institutional holders outside SoftBank are relatively small — Capital Research and Management added 2.4 million shares through June, Van Eck added another 2.2 million, suggesting some dip-buying at higher prices. The next earnings event is not until November 4. Between now and then, the focal points are whether the street further trims targets to close the gap with the current price, and whether the Armv9 royalty ramp narrative — the core of the bull case — gets updated guidance that stabilises sentiment at these levels.
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