WDAY heads into its August 25 results with short sellers still unwinding, options traders leaning bullish, and a stock propped up by both a 42% one-month rally and a live take-private story that no earnings print can fully resolve.
The short-covering trend documented earlier this week has continued. Short interest now stands at 10.8% of the free float — still elevated in absolute terms, but down more than 22% over the past month and the lowest it has been since Silver Lake's reported approach broke on August 13. The ORTEX short score has dropped steadily from 61.3 to 54.7 over the past two weeks, reflecting the direction of travel. Borrow conditions offer no squeeze catalyst: cost to borrow has fallen 25% this week to just 0.42%, and availability has surged to nearly 800% of current short interest — the loosest it has been in the past year. Shorts reducing exposure are doing so voluntarily, not under mechanical pressure. Options traders are pointing the same direction: the put/call ratio has dropped to 0.93, nearly 1.7 standard deviations below its 20-day average of 1.02, and the closest to the 52-week low of 0.60 the market has seen in months. Taken together, positioning looks more bullish than at any point in recent memory — but that cuts both ways heading into a binary event.
The fundamental debate is genuinely split. Bulls point to Workday's AI adoption trajectory, the Agentic platform's incremental revenue potential, and the ongoing expansion into ITSM and travel software as drivers of durable growth beyond the current deceleration. Bears flag the harder numbers: organic growth slowed to 12.8% last quarter from 14.2% the prior period, a 25-basis-point headwind from the DIA contract looms in Q4, and higher AI investment spending risks compressing operating margins. The Street's target revisions this month tell that tension clearly. B of A and UBS both lifted targets sharply — to $205 and $220 respectively — while holding Neutral ratings. BTIG went further, downgrading to Neutral outright. Morgan Stanley, which moved to Underweight in late July, remains the most bearish voice on record with a $145 target. The consensus mean of $186 trails the current price of $200 — the stock has moved beyond where most analysts are comfortable following.
Peer context adds a layer. Close software comparables CRM and GWRE both rose strongly this week, up 6.6% and 7.7% respectively, suggesting sector sentiment has been broadly supportive. DOCU bucked the move, slipping slightly, the only meaningful laggard in the cohort. WDAY's own one-week gain of just 0.7% looks restrained by comparison — consistent with a stock already carrying a large event premium from the buyout speculation rather than responding to sector tailwinds.
The August 25 print will therefore test two things simultaneously: whether Workday's operational numbers can justify a stock trading above every revised analyst target, and whether the Silver Lake deal narrative survives contact with a quarter that flagged growth deceleration before the rumour ever broke.
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