PATH's 46% Rally Runs Into a Short-Heavy Wall Before the Print

UiPath heads into its September 2 earnings release as one of the most-shorted names in enterprise software — and the stock just had its best month in years.

Short sellers are deeply dug in, yet losing ground fast. Short interest runs at 25.6% of the free float — a level that ranks in the bottom 11th percentile of the market on ORTEX's short score — but the position has shrunk roughly 16% over the past month as the stock surged 46% to $18.67. Borrow costs remain remarkably cheap at just 0.51%, and availability has loosened to 225% — more than two shares available to lend for every one already borrowed, up sharply from around 104% at the end of July. That combination of heavy nominal short interest and a loosening lending market tells a nuanced story: shorts have not been squeezed out of the borrow pool, but they have been bleeding on mark-to-market. The put/call ratio jumped to 0.62 on the final trading day of August — more than 2.3 standard deviations above its 20-day average and close to its 52-week high of 0.67. Investors are hedging hard into the print, even as the underlying has just posted one of its strongest monthly runs.

The analyst community has barely kept pace with the move and mostly disagrees with the tape. UBS raised its target from $12 to $19 on the morning of earnings — bringing it just above the current price — while maintaining a Neutral rating. That is the most aggressive recent upward revision, but most of the Street remains unconvinced: the consensus mean target is $13.87, well below the $18.67 close, implying the market has re-rated the stock far past what analysts are willing to endorse. The bear case centers on multiple compression in enterprise software, a softening dollar-based net revenue retention rate at 107%, and concerns about inorganic growth from the WorkFusion acquisition. Bulls point to 14% revenue growth, ARR climbing to $1.85 billion, and RPO growth of 19% — signals that the underlying business has more durability than the valuation discount implied. The P/E has expanded roughly 6.5 turns over the past 30 days, now running at 21x, driven almost entirely by the price move rather than estimate upgrades.

The ownership picture adds one more layer of complexity. CEO and Chairman Daniel Dines holds 17.6% of the company — and his 13G filing in February recorded 19.2% of class, down from 19.9%, consistent with the programmatic sales he executed in January under a 10b5-1 plan. Those sales — roughly 45,000 shares per day across 10 consecutive sessions — were pre-arranged and reflect wealth-management mechanics rather than a conviction call. Tetragon Financial has been building a position, adding over 10 million shares across two 13G filings to reach a disclosed 6.8% stake, while BlackRock held 8.6% as of its January filing. Peer context sharpens the picture: CRM gained 22% on the week, NOW added 12.6%, and CXM rose 10% — software broadly re-rated higher, giving PATH cover for its move but also raising the bar for what the print needs to deliver.

The earnings release is therefore less a test of whether UiPath is growing and more a test of whether a 46% one-month rally — in a stock that still carries 25% short interest and trades above every major analyst target except one freshly revised on the morning of the event — can be justified by the underlying numbers.