Galaxy Digital earnings preview: shorts hold the bet, options say otherwise

Galaxy Digital Inc. reports today with short interest at its highest level in at least a year and options traders pulling hard in the opposite direction.

Short interest has climbed to 17.5% of the free float, roughly 33.6 million shares, up 12% over the past month and still creeping higher. FINRA's most recent official count put 34.6 million shares short with 5.8 days to cover, confirming the scale. The ORTEX short score has held around 70 to 71 for two weeks, ranking GLXY in the bottom 5% of all stocks by this measure. Yet the borrow market is relaxed. Availability has loosened slightly over the week to 125% of short interest, meaning lenders have more shares available than are currently borrowed. Cost to borrow is a modest 0.6%. The short position is large and established; the mechanics for a forced unwind are not yet in place.

Options traders are reading the situation differently. The put/call ratio has dropped to 0.43, nearly two standard deviations below its 20-day average of 0.51. That is the most call-heavy positioning has been in months, sitting close to the 52-week low of 0.30. With the stock down 35% over the past month to $15.68, options positioning reflects a market reaching for the upside rather than bracing for more damage. The stock also held up last week, slipping just 0.3% while its closest peers fell 4% to 14%: COIN dropped 5%, BKKT fell 9.5%, and GEMI shed 14%.

The analyst debate is between those who trust the dual-engine story and those who see too many moving parts. The bull case rests on Galaxy's combination of digital-asset fee income and an AI infrastructure build: the company has 830MW of approved gross power capacity and a 3.4GW pipeline, with data-hall revenues already beginning in Q2. Morgan Stanley trimmed its target to $43 from $48 on October 12, still maintaining Overweight, while Citi upgraded to Buy on October 13, lifting its target to $28. Against that, Piper Sandler cut to $25 from $33 on October 20, and Rosenblatt lowered its target on the morning of the report to $30. The mean target across the analyst group is $37.63, more than double the current price. The bear side is straightforward: earnings move with crypto prices, the average loan book fell from $1.8 billion to $1.4 billion last quarter, and a slip in the HPC contract timeline would push infrastructure revenues further out.

The history here matters. The last two prints both went badly: the stock fell almost 12% on August 5 and nearly 20% in late July, both of those moves followed by smaller but continued losses over the five days after. Capital Research holds 9.4% and FMR about 8.5%, and neither reported significant trimming in the most recent filings, though those positions are as of mid-year. CEO Michael Novogratz holds just under 50% of the class, down from 53.5% in his last 13G/A, filed in February.

Today's print will test whether the AI infrastructure narrative has grown enough to offset another quarter of pressure on the digital-asset side, and whether the gap between a $15 stock and $37 analyst targets is a mispricing or a signal.