WDAY enters its August 25 earnings report with short sellers still in full retreat, options traders the most bullish they've been all year, and a stock trading above where most analysts are willing to follow — all while the Silver Lake take-private story simmers in the background.
The short-covering trend that dominated last week has not paused. Short interest has fallen a further 15% over this week alone, reaching 10.8% of the free float — down from nearly 14% in mid-July and the lowest reading since the buyout news broke on August 13. Over the past month, shorts have unwound more than 22% of their aggregate position. The borrow market offers no mechanical explanation: cost to borrow is just 0.51%, up a modest 6% on the week, and availability has expanded sharply — now running at 664% of current short interest, the loosest it has been in the past year. Shorts are not being squeezed out. They are choosing to reduce exposure ahead of a binary event.
Options positioning has swung to its most bullish extreme of the past twelve months. The put/call ratio dropped to 0.87 on Tuesday — nearly three standard deviations below its 20-day average of 1.05, and close to the 52-week low of 0.60. For most of the past six weeks the ratio was running well above 1.0, reflecting hedging demand in the wake of the buyout-driven gap higher. That protective posture has now reversed sharply, with call buying dominating. Compared with close peers — and were both lower on the week, and barely moved — WDAY's 5% weekly gain stands out as distinctly event-driven rather than sector-wide.
The Street remains caught between the deal premium and the underlying fundamentals story. B of A raised its target to $205 this week, maintaining Neutral — a large absolute move but a cautious rating given the stock is already trading at $190. Jefferies and UBS made similar moves last week, lifting targets to $205 and $220 respectively while keeping non-committal stances. Baird is the relative outlier with an Outperform and a $215 target. Against that, BTIG downgraded to Neutral, and Morgan Stanley — which moved to Underweight in late July with a $145 target — has not revisited its call. The mean target of $180 sits roughly 5% below the current price, meaning the consensus still lags the tape. The bull case rests on AI product adoption and the Agentic platform expansion; the bear case points to the 25-basis-point headwind from the DIA contract, slowing organic growth at 12.8% versus 14.2% last quarter, and margin pressure from elevated AI investment. The ORTEX short score has eased to 55.4 from 61.3 ten days ago — consistent with the covering trend, but still in territory that reflects meaningful skepticism about the fundamental story independent of any deal.
The earnings history adds a note of caution. The last two post-results sessions produced declines of 3% and 6% respectively, and the five-day window after the June print was down 11%. The August 25 report therefore carries asymmetric significance: a strong beat could validate both the buyout premium and the short-covering thesis simultaneously; a miss would test whether deal speculation alone can hold the stock at these levels.
The August 25 print is the next hard catalyst — and the degree to which Silver Lake commentary either surfaces or goes quiet in the days surrounding it will be at least as closely watched as the subscription revenue line.
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