MPWR Shorts Retreat to a Year-Low Before Tonight's Results

Monolithic Power Systems reports Q3 results after the close today with short sellers at their least committed in over a year.

Short interest has fallen to 3.3% of the free float, its lowest level in the data series shown here. The move down is sharp: positions are off 20% over the past month, with another 6% covered in the past week alone. At 1.6 million shares short, the position is a fraction of what it was in late September, when shorts held closer to 2.1 million shares.

The borrow market reflects this retreat. Cost to borrow is a nominal 0.45% annually, and share availability is effectively unlimited, with shares to lend dwarfing the outstanding short position by a factor of roughly 28. There is no squeeze mechanism in place. The stock itself has recovered 2.6% over the past week to $1,198.81, outperforming the median of its closest peers: ADI gained 5.5% and AMD 4.7%, while LSCC and MTSI fell 3.4% and 4.4% respectively. MPWR's week-on-week gain looks like a partial recovery from a brutal October, which has taken the stock down 11% from its month-ago level.

The analyst community has been trimming targets ahead of tonight, though buy-side conviction remains intact. Oppenheimer and Wells Fargo both lowered price targets in the past two weeks, to $1,500 and $1,550 respectively, while maintaining positive ratings. TD Cowen cut its target to $1,700, also keeping its Buy rating. The consensus mean of $1,799 still implies roughly 50% upside from current levels. The bull case rests on AI data center exposure: Enterprise Data and Communications make up 57% of sales, and management has guided for at least 130% growth in Enterprise Data this year. The bear case points to concentration risk, with 37% of revenue tied to China and a competitive power-management landscape where larger rivals can bundle broader solutions.

Options positioning has eased since the prior article published four days ago. The put/call ratio was 1.21 and nearly 1.8 standard deviations above its 20-day average then. It has since slipped back to 1.19, now less than one standard deviation above the mean. Hedging demand has receded alongside the short covering, leaving the stock with a more neutral options posture than it carried entering the week.

Tonight's print will test whether the Enterprise Data acceleration that drove a 14% one-day gain after the July quarter can be repeated, or whether the target cuts from analysts signal a more cautious read on the pace of AI-driven demand into year-end.