BWA Heads Into Q3 Preview With Shorts Still Elevated

BorgWarner reports again on August 5, just days after its July 30 Q2 print, with the short positioning that rebuilt so sharply ahead of that release still largely intact — and options traders back near defensive highs.

Short interest has barely moved since the July 24 rebuild. Shorts jumped from roughly 6.6 million shares around July 22 to over 9 million by July 24, pushing SI to 4.2% of the free float, and that position has held. The most recent reading is 4.16% of float — down only marginally from the peak. That makes the rebuild deliberate rather than reactive: the July 30 print came and went (the stock gained around 2.5% on the day), yet shorts did not cover meaningfully. Borrow costs remain subdued at 0.45%, and availability is extraordinarily loose at over 6,000% — the lending pool is barely touched — confirming there is no forced short dynamic. Bears are choosing to stay.

Options positioning is the second consistent signal. The put/call ratio has eased only slightly from its near-52-week highs seen ahead of the July 30 print, now at 0.70 against a 20-day average of 0.64 — about 0.85 standard deviations elevated. The PCR peaked at 0.72 (the 52-week high) in the days before the Q2 release. It has not collapsed in the wake of the positive price reaction, which suggests options traders are treating the August 5 event as a fresh test rather than rolling off hedges. The stock itself has drifted lower — off about 1% on the week and 4% over the past month, closing at $63.74 — while peer LEA dropped over 10% on the week and ADNT fell nearly 4%, putting BWA in better relative shape across the auto-parts complex.

The analyst community has been broadly constructive. Multiple firms raised targets between May and July — Barclays lifted its target to $83 (Overweight) in early July, and UBS upgraded to Buy with a $95 target in June. The consensus mean target stands near $77, roughly 20% above the current price. Morgan Stanley is the outlier, holding at Equal-Weight with a $67 target, reflecting caution on the pace of BorgWarner's EV transition execution and the risk that margins disappoint at the segment level. The forward EPS momentum score ranks in the 83rd percentile, a genuine bull case; bears counter that insider selling has been persistent — the CEO sold nearly $2 million of stock in May, and VPs have been trimming steadily since — signalling executives are not expecting a sharp re-rating.

The August 5 print is therefore a test of whether the Q2 beat was a turning point or a one-quarter reprieve: specifically, whether BorgWarner's electrification revenue trajectory and margin guidance can give the still-elevated short position a reason to finally cover.