IOT heads into its Q2 earnings release — due after the close on September 3 — with short sellers in full retreat and analysts lifting targets, yet the stock still slipped 4.4% on Tuesday and the history books are not kind to its day-one reaction.
The most striking data point this week is the collapse in short interest. Bears have unwound roughly a third of their position over the past month, with short interest falling from near 39 million shares in late July to 26.3 million now — 7.5% of the free float, down 21.8% on the week alone. The unwind has been orderly rather than forced: borrowing costs remain negligible at 0.56%, and availability is generous at 502%, meaning around five shares are available to borrow for every one already lent out. That's well clear of any squeeze mechanics. The ORTEX short score has followed the position lower, dropping from 58 to 51 over the past ten days, reflecting a market that is less sceptical than it was a fortnight ago. Options traders are similarly relaxed — the put/call ratio of 0.59 is barely above its 20-day average of 0.56, and a z-score under 1.0 means there is no unusual hedging pressure building ahead of the print.
The Street has been busy raising targets. Keybanc lifted its target to $46 last week. TD Cowen moved to $48 earlier in August. RBC Capital went to $50. The direction of travel is clear — five of the last six analyst actions have been target raises, with the consensus sitting at "buy" across 16 firms and a mean target near $45.66. The one dissent came from Piper Sandler, which cut its rating to Neutral in mid-August while leaving the $40 target unchanged. Against a closing price of $39.06, the bull case from Samsara's ARR growth of 30%, its first GAAP-profitable quarter, and 400% year-on-year growth in Asset Tags ARR forms a credible foundation. The bear case centres on a reported 20% decline in Heavy Duty Truck sales and questions about concentration risk in its subscription model. Valuation is not cheap — the P/E runs near 50x and EV/EBITDA is just above 45x, both having crept higher over the past month — so the stock needs a clean print to justify the re-rating.
Institutional ownership adds an interesting layer. T. Rowe Price has been the most aggressive accumulator recently, adding over 12 million shares to reach 8.4% of the company. Co-founders Sanjit Biswas and John Bicket each hold around 16% of the float, though both have been reducing via pre-planned 10b5-1 programmes — Bicket sold roughly $8.6 million of stock in January. Those are scheduled sales rather than discretionary conviction trades, so they carry limited informational weight. One item worth flagging is the 13D/A on the register from General Catalyst, the VC backer, at 4% of shares — below the formal activist threshold but still carrying the 13D designation. Marc Andreessen filed a 13D/A as well, though his position has shrunk from 5.7% to 1.2% per the most recent disclosure. As always with 13D/G filings, these stakes are as-last-disclosed; a holder dropping below 5% can exit without a further filing.
Earnings history adds the sharpest caution. Every one of the last three reactions has been negative on day one: -12.7%, -7.4%, and -4.2% respectively. The five-day picture has been more forgiving — two of those three prints recovered to show gains of 7-9% by the end of the week — but the pattern is clear: Samsara has tended to trade down hard on the day, then stabilise. Peers offer some context for the week as a whole: NOW rose 12.5% over the past five sessions and PATH gained 8.9%, while IOT ended flat. The sector has been rewarding earnings beats generously, which may partly explain why shorts chose this week to cover aggressively.
What to watch: whether tomorrow's ARR trajectory and any update on the Heavy Duty Truck business are enough to break the stock's streak of negative opening reactions, and whether the covering shorts re-engage if the stock sells off on the print in the way history suggests it might.
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