Galaxy Digital is back in an uncomfortable position: shorts are quietly rebuilding after a brief retreat, the stock has shed another 9% this week to $20.13, and the gap between where it trades and where analysts think it should trade has widened further.
The previous note flagged that bears had been reducing exposure after the July 28 earnings drop. That trend has now reversed. Short interest climbed from roughly 27.1 million shares to 29.2 million across the week — an 8% rise that takes the position back to 15.2% of the free float, up from 14% a week ago. The rebuild has been brisk: shares short rose more than 6% in a single session on August 11 alone. This is no longer a story of shorts covering into weakness; they're adding into it.
The borrow market complicates the picture slightly. Availability has tightened meaningfully — dropping from around 236% of short interest last Monday to 168% by Tuesday's close, the tightest reading since mid-July. That tightening happened as shorts added positions, suggesting demand for borrows rose faster than lenders could supply new shares. Cost to borrow has edged up 24% on the week to 0.54%, though in absolute terms it remains low, well inside what would constitute a genuine squeeze threat. Options traders are not particularly alarmed either: the put/call ratio at 0.475 sits fractionally below its 20-day average of 0.485, roughly in line with recent norms and far from the defensive extreme seen earlier this year when the ratio touched 1.06.
The analyst community has held its collective Buy/Overweight stance but moved in one direction on price targets: down. BTIG lowered its target from $50 to $45 on August 5, following Rosenblatt's cut from $39 to $35 a few days earlier. Piper Sandler trimmed from $36 to $33 in July. The Street mean still sits at $39.78 — implying roughly 98% upside from the current $20.13 — but that target has been drifting lower and the gap has widened as the stock has fallen. The bull case centres on Galaxy's institutional crypto asset management franchise and its data centre exposure via CoreWeave; the bear case is familiar — crypto cycle sensitivity, execution risk on data centre contracts, and regulatory uncertainty. EV/EBITDA has expanded sharply on the price decline, climbing roughly 8.9x over 30 days to 35x, which makes the valuation story harder for bulls to press. The ORTEX short score has ticked up to 66.8, its highest reading of the past week, reflecting the renewed short-side momentum.
One institutional move worth noting: BlackRock added 4 million shares as of July 31, lifting its position to 9.8 million and making it the third-largest declared holder. That's a meaningful accumulation for a passive-leaning manager. Jane Street also built a substantial position of 9.7 million shares in the most recent reporting period. The contrast between institutional accumulation at the holder level and rising short interest at the lending level is the defining tension in the stock right now.
The earnings calendar puts the next catalyst on November 5. The last two prints produced day-one moves of -20% and -12% respectively, so the stock's tendency to punish misses sharply is well established. Between now and then, the question is whether the short rebuilding slows as the stock approaches its 52-week lows — or whether the availability tightening accelerates as the lend supply struggles to keep pace with demand.
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