Melco Resorts & Entertainment heads into its August 13 earnings release with options positioning quietly shifting more defensive — even as short sellers continue to retreat.
The sharpest signal this week comes from the options market. The put/call ratio has climbed to 0.31, more than two standard deviations above its 20-day mean of 0.29 — a reading that, while modest in absolute terms, is statistically elevated relative to recent norms. The move is notable because it comes while short sellers are actually reducing exposure: short interest has fallen roughly 20% over the past month to just 1.1% of the free float, a level too low to generate meaningful squeeze dynamics. These two signals are pointing in different directions. Options traders are buying more downside protection; shorts are heading for the exits. The disconnect is worth watching into the print.
Borrow conditions tell an unambiguously relaxed story. Availability is extraordinarily loose at roughly 4,446% — meaning shares available to borrow dwarf the current short position by more than 44 times. That's well above even the 52-week minimum availability of around 1,027%, itself a comfortable reading. The cost to borrow has eased to just under 0.50%, down from a brief spike to 1.15% on July 31. There is no lending-market pressure here whatsoever. Anyone wanting to build a short position faces no friction, yet shorts have consistently trimmed through July and into August, which in itself is a form of sentiment data.
The Street remains nominally constructive but is busy cutting numbers. The consensus sits at buy across seven analysts, with a mean price target of $7.59 — implying roughly 37% upside from the current $5.55. However, the direction of travel on targets has been consistently downward. Susquehanna cut its target from $12 to $8 this week while keeping a Positive rating. JP Morgan trimmed from $6.00 to $5.70 in July, maintaining Neutral. Morgan Stanley downgraded to Equal-Weight in late June, lowering its target to $6.00. Citigroup held Buy but pulled its target from $10.50 to $9.40. The bull case rests on depressed valuations — the stock trades at roughly 7.7x trailing earnings and 6.3x EV/EBITDA — and on MLCO's strong track record of beating estimates, where it ranks in the 92nd percentile on EPS surprise. The bear case is structural: forward EPS growth sits in just the 14th percentile, the price-to-book is negative due to balance sheet leverage, and Morgan Stanley's June downgrade flagged persistent uncertainty around Macau's premium mass recovery.
One ownership note adds colour to the thesis. Fidelity International nearly doubled its position in Q1 2026, adding 4.78 million shares. D.E. Shaw added 1.69 million shares over the same period. BlackRock added a further 610,000 in Q2. These are incremental votes of confidence from institutional buyers — though they're offset by ARGA trimming roughly 2.1 million shares in the most recent quarter. The parent, Melco International Development, holds 59% and has not moved.
The earnings history is thin but consistent: the last two releases produced a small negative day-one move of around 0.7–1.1%, followed by a mild five-day recovery. MLCO's closest gaming peer WYNN gained 7.4% on the week, while LVS slipped 0.7%. MLCO itself is down half a percent over the same period, suggesting the stock has not fully participated in the broader Macau optimism that lifted Wynn. The August 13 print is therefore less about whether Macau volumes beat and more about whether management can address the leverage narrative that has weighed on targets across every major bank covering the name.
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