ENPH Bears Trim Back, But the Short Still Looms Large

Enphase Energy arrives at its October 26 report with bears still heavily positioned but showing the first signs of retreat, while options traders have moved more defensively this week than at any point in recent memory.

Short interest slipped modestly from the highs reached last week. At 20.7% of the free float, it remains one of the largest short positions in the solar space, but that is down from 20.8% a week ago and has eased slightly over the past two sessions after peaking in mid-October. The more dramatic move in the short data came earlier in the month: the previous note, published October 14, flagged a 41% surge in short interest over thirty days to what was then a fresh high. That acceleration has now levelled off. Short sellers are still very much in the trade, but they stopped adding to it this week. The ORTEX short score edged back from 65.5 to 62.7, still elevated but off its recent peak. Borrow conditions remain frictionless. Availability expanded further to 429%, up from 405% a week ago, meaning there are more than four lendable shares for every one currently borrowed. Cost to borrow is 0.49% annually. Bears have no mechanical reason to cover.

Options positioning is the sharpest change from last week's read. The put/call ratio climbed to 0.66, now running more than two and a half standard deviations above its 20-day mean of 0.63. A week ago that ratio was at 0.62, sitting at the low end of its 52-week range. The shift is abrupt. Heading into earnings five days out, options traders have moved from a near-record call-heavy stance to something meaningfully more defensive, the highest put-relative-to-call demand seen in months. The 52-week high on the put/call ratio is 0.87, so this is not yet extreme, but the direction of travel in the final week before the print is notable.

The Street has been uniformly cutting targets without changing its split verdict. In the past week alone, BMO lowered its target to $28 from $37 while keeping Market Perform, and JP Morgan took its number to $35 from $40 at Neutral. Morgan Stanley, already at Underweight, moved to $24 from $27 the week before. The pattern from the last month is consistent: every major firm that has acted has trimmed its target, and none has upgraded. The mean analyst target sits at $50.63, well above the current $32.23 price, but that average is dragged up by older, higher targets that have not yet been revised down. Goldman Sachs and Jefferies both hold Buy ratings but have already cut targets sharply, to $47 and $42 respectively. The bear case centres on a 31% year-on-year decline in US residential solar permits and a US market share drop from 33.1% to 29.2%. The bull case rests on the IQ9 microinverter launch, a next-generation battery, and European demand recovery, with Dutch battery activations up 75% in April.

Retail attention is elevated heading into the print. Wikipedia views for Enphase are running nearly two standard deviations above their own 90-day history, a signal that captures attention rather than any revenue indicator.

The stock gained 5.2% on Tuesday to close at $32.23, recovering some of October's 7% decline, and is fractionally positive for the week. Closest correlated peer SEDG fell 0.5% over the same week, while FSLR dropped 6.5% and TE fell a steep 21.8%. Enphase's relative outperformance against the peer group is the one clean positive data point for the week.

The October 26 earnings release is five days away. The question the data frames is whether the short position, which stopped growing this week but did not shrink meaningfully, and the newly defensive options skew represent genuine conviction ahead of the print or a precautionary hedge that unwinds if results meet the reduced Street expectations.