Short interest has surged in the run-up to AES' earnings print this week. SI climbed 42% over the past month to reach 3.6% of free float, with nearly all of that build concentrated in the last ten days. The stock added 2.5% over the same period and closed at $14.49 Friday, roughly flat on the week. Options positioning has turned more defensive than usual, with the put/call ratio running well above its recent average at 0.63 – that's 1.5 standard deviations above the 20-day mean. Borrow costs remain minimal at 0.38% and utilisation sits at just 1.5%, far below the 52-week high of 9.4%, so the recent short build reflects bearish conviction rather than supply constraints.
Analyst sentiment has soured sharply since the last print. Morgan Stanley downgraded from Overweight to Equal-Weight in early March, slashing its target from $23 to $15. Susquehanna followed in April, cutting from Positive to Neutral and trimming the target to $15. Barclays also moved to the sidelines in February, downgrading to Equal-Weight while holding the $15 target. The consensus price target now sits at $15.11, just 4.3% above the current price, and the recent cascade of downgrades suggests the Street is recalibrating expectations around near-term earnings power. One bright spot: Seaport Global upgraded from Sell to Neutral in late February, removing the most negative voice.
Past earnings reactions have been volatile and mostly negative. The last four prints delivered an average five-day decline of roughly 7%, with the most recent event in early March producing a -17.9% one-day drop. Institutional holders have been adding on the dip – Vanguard, BlackRock, State Street and Columbia Management all increased stakes in Q1, though Invesco trimmed nearly 2 million shares. Insider activity shows net selling of 164,000 shares over the past 90 days, nearly all of it concentrated in late February when the C-suite, including CEO Andres Gluski, sold roughly $2.7 million worth at prices around $16.27.
Tuesday's report will test whether the company can stabilise margins and guidance after the sharp reset that followed last quarter's miss. The setup suggests the bar is low, but the crowded short position and defensive options stance indicate the market is braced for further disappointment.
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