SK Hynix Shorts Cover Into the Rally as the Print Lands

SK hynix closed Tuesday at KRW 1,341,000, up 5.2% on the day and 9.6% for the week, a move that runs sharply against most of its closest peers: MU added 3.6% over the same stretch, while 8035 (Tokyo Electron) fell nearly 7% and 285A (Kioxia) dropped 4%.

The lending market has completed a near-total reversal from the conditions documented earlier this week. Availability has climbed back above 9,000%, meaning the pool of shares available to borrow is roughly 200 million shares against a tiny fraction actually on loan. That is the loosest borrow market SK Hynix has seen all year. The 52-week minimum availability reading was 3,837%, so even at its tightest the stock was never truly hard to borrow, but the current reading reflects a sharp unwind from the squeeze conditions that briefly emerged around October 12 to 14, when availability compressed to below 7,000% and cost to borrow touched its highest point in the 30-day window. Cost to borrow has since fallen 36% over the past week to 0.32%, near the low end of its recent range. The ORTEX short score has drifted down to 25.1 from 25.7 two weeks ago, placing it in the 96th percentile of the universe for low short pressure. Taken together, the borrow market is telling a different story from the aggressive short accumulation documented in Monday's note: a meaningful portion of the 14.6% week-on-week build in short shares appears to have been covered into the rally.

The valuation case that has been a recurring theme in recent notes has grown only more compressed at these prices. The trailing price-to-earnings multiple is running near 3x and the EV/EBITDA ratio around 2.3x. Both have expanded modestly over the past week as the stock recovered, but remain well below any reasonable historical anchor for a business of this quality. The earnings yield factor scores in the 95th percentile of the universe, and EV/EBIT in the 98th, reflecting how cheaply the market is pricing the company's cash generation relative to peers. The factor picture is not uniformly positive: the forward EPS growth score sits in the 12th percentile, a reminder that the Street's 12-month estimates are still pointing down. Analyst consensus has offered no fresh direction this week, with no recent target changes in the data.

The only institutional flow worth noting is BlackRock adding roughly 990,000 shares as of September 30, bringing its stake to 5.15% of shares outstanding. Vanguard added 928,000 shares over the same period. Those moves were modest relative to the overall register, but the direction is consistent with larger passive and active managers adding on weakness. Van Eck stands out for a larger proportional increase, adding 2.25 million shares to reach 0.32% of the company. The single largest holder, SK Square, held its 20% stake unchanged.

Q3 earnings are due on October 29. The one comparable reaction in the history data is the July 29 print, where the stock fell 14.7% on the day before recovering 7.6% over the following five days. That pattern, a sharp initial drop followed by a partial recovery, sets the context for how the market has most recently processed SK Hynix results. The direction of any move will depend on how the memory pricing outlook and AI-related HBM volumes are framed by management, not on the current borrow market, which now sits in a state of unusual calm.