CarMax arrives at its September 29 quarterly print in an unusual position: the stock has shed 8.5% over the past month while short sellers have been quietly covering, leaving bulls and bears less sure of themselves than the price action alone would suggest.
The short side of the ledger tells a notably constructive story. Short interest has fallen roughly 20% over the past month, dropping to 7.5% of the free float — still meaningful, but the direction of travel has shifted decisively. From a mid-August peak near 13.8 million shares short, positions have unwound to around 11 million. Borrow conditions remain loose, with availability far above any threshold that would constrain a short seller. Cost to borrow has ticked up 43% on the week to 0.61%, but from such a low base that it signals no serious squeeze pressure — this is still an easy stock to borrow. Positioning looks less aggressive than the SI level implies.
Options traders are mildly more defensive going into the print. The put/call ratio has edged to 0.52, running above its 20-day average of 0.50 by roughly 1.4 standard deviations. That's a real but modest shift — nowhere near the 52-week high of 0.89 that would signal genuine alarm. The move is consistent with light hedging ahead of earnings rather than outright bearish positioning.
The Street is where the tension sharpens. Two bellwether firms moved this week. Morgan Stanley raised its target to $47 from $44 while keeping an Equal-Weight rating — a target that sits well below the current $56.84 price. JP Morgan lifted its target to $70 from $60 last Thursday, also maintaining Neutral. The gap between the two implies dramatically different views on where the used-car cycle lands. The mean analyst target of $56.54 sits almost exactly at the current price, which is a rare setup: the consensus is not offering any upside. Bulls credit the stock's 49% year-to-date gain to a genuine earnings inflection and improving positioning in used vehicles. Bears argue that cost discipline has come at the expense of advertising and technology spend, leaving CarMax exposed to Carvana's continued market-share push. Price-to-earnings has compressed nearly 2.3 turns over the past month to around 19x, and price-to-book is down nearly 11% over the same period — the market is quietly marking down the premium it was willing to pay even as the share price fell.
Institutional flows add one genuinely interesting data point. Starboard Value, which had held around 6.2 million shares as recently as late 2025, reported just 3.2 million shares at last disclosure — a reduction of roughly 2.9 million shares in a single quarter. Starboard's drawdown is the largest single change in the top-15 holder list, and while the data carries the usual caveat that 13D/G disclosures lag actual moves, the direction is clear. Offsetting that, American Century added 1.86 million shares in the most recent reported period, and Dimensional Fund Advisors added 699,000 — so the ownership story is not uniformly negative, but the Starboard exit is a notable signal from an active manager that had previously been a meaningful holder.
Recent earnings history offers limited guidance on directionality: the June 2026 print produced a 3.1% one-day drop, while the prior result delivered a 3.0% gain. The stock has swung modestly in both directions at recent releases, with five-day moves that quickly reversed the initial reaction. With the consensus target offering essentially no forward return at current prices and a split analyst community, the September 29 print is less about whether CarMax is recovering and more about whether the company can demonstrate that unit economics are improving fast enough to justify the multiple the market assigned earlier this year.
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