American Eagle Outfitters enters May with a curious contradiction: short interest high enough to matter, yet clearly retreating. The stock fell 8.5% this week to $17.12, while bears quietly reduced their bets.
Short positioning is elevated but has been pulling back all week. SI as a percentage of free float runs at roughly 11.1% — a meaningful level — but that is down from a local peak of 12.3% hit on April 10, and has drifted lower through every session this week. Over the past month shorts increased by about 8%, so the base is higher than it was in March. This week, however, they trimmed 3.9%. The pattern looks like a crowded trade that is not getting more crowded: bears built aggressively through early April, then started booking profits as the stock fell. Availability in the lending market tells a similar story — loose, with borrow cost at just 0.47% annualised, down 22% on the week. There is no squeeze pressure here.
Options traders are modestly more relaxed than usual. The put/call ratio clocked 0.80 on Wednesday, fractionally below its 20-day average of 0.86 — a z-score of -0.72, indicating calls are slightly more favoured than normal. That is a mild but notable contrast: with short interest still elevated and the stock having just shed 8.5% in a week, the absence of a defensive options tilt suggests the options market is not chasing the selloff. The PCR has been declining all week, pulling back from the 1.05 level touched on April 20. Put it together and the lending and options data read as cautious but not panicked.
The Street is broadly uninspired. The consensus sits at Hold with nine analysts carrying that rating, and Needham initiated at Hold as recently as late March. Most of the post-earnings analyst activity in early March was a ratchet downward on price targets: TD Cowen cut from $27 to $21, Barclays lowered from $24 to $19 (maintaining Underweight), and Telsey trimmed from $28 to $25. Citi bucked the trend by nudging its target one dollar higher to $24 on a Neutral. The bear case is straightforward — the core American Eagle brand is posting declining comps and the company faces mounting tariff headwinds. The bull case rests squarely on Aerie, where the so-called "Sweeney effect" from its celebrity partnership has shown real momentum in early FY26. On valuation, AEO trades at 9.4x earnings and 6.7x EV/EBITDA — cheap in absolute terms, though the EV/EBITDA multiple has slipped about 0.1 turns over the past month as the stock has repriced. The ORTEX short score has also eased, dropping from 53.4 earlier in April to 49.7 — crossing below the midpoint and suggesting the short-side consensus is losing a little conviction even as SI remains high.
The most recent earnings report, filed on March 4, produced a 13% one-day drop and an 18% five-day loss — a sharp reaction that helps explain why short interest climbed so hard through April. That earnings overhang is the dominant frame for the stock right now. Peers have been broadly weak alongside AEO: ANF shed 9.1% on the week, URBN fell 8.6%, and DBI dropped 11.4%, so the selling is sector-wide rather than specific to American Eagle. CEO Jay Schottenstein received a stock award in early April while simultaneously selling 31,610 shares at $16.84 — a routine vest-and-sell pattern rather than a directional statement, with net insider activity modestly positive over the 90-day window.
What to watch: the next earnings date is not yet confirmed, but given the scale of the March reaction and the unresolved tension between a weakening AE brand and a recovering Aerie, the shape of the next quarterly print — and specifically whether Aerie comps hold above the mid-single-digit growth implied in the bull case — is the event that matters most for where short positioning goes next.
See the live data behind this article on ORTEX.
Open AEO on ORTEX →ORTEX Market Intelligence content is generated by AI from a snapshot of ORTEX's proprietary data. Content is informational only and does not constitute investment advice.
