Paycom Software enters the post-earnings window with a notable short position shrinking — but not disappearing. The stock added 5.5% on the week to close at $131.68, and the read from the lending market is that bears have been actively covering. That tension between a recovering price and a still-elevated short base is the defining story this week.
Short sellers have been paring exposure since the Q1 report, but the position remains significant. SI as a percentage of the free float has dropped to 11.2% from a peak of around 12.8% in mid-April — a meaningful retreat, but still comfortably above the 9–10% range that prevailed through early April. The step-change higher in mid-April, when short interest jumped sharply from around 9.3% to above 12.5% in a matter of days around April 10–13, now looks like a pre-earnings accumulation. That position has been bleeding off since the Q1 number landed — roughly 1.5 percentage points of float have been covered in under two weeks.
The borrow market reinforces the covering narrative. Cost to borrow has eased to 0.42% — down roughly 16% on the week and nearly 24% over the past month — and availability is comfortable, meaning there is no friction pressuring shorts to stay in the trade. Borrow availability is running well off its 52-week tightness: utilization has retreated to around 19–20%, down from a high of 42% at any point in the past year, suggesting ample headroom in the lending pool for anyone who wants to put on or add to a short position. That loose backdrop removes one of the usual squeeze catalysts.
Options traders have also shifted notably more constructive. The put/call ratio has fallen to 0.67, well below its 20-day average of 0.75 and close to its 52-week low of 0.63. The z-score of roughly -0.79 confirms this is not a defensive posture — call flow dominates. Through most of April, when the stock was under pressure and the short position was being built, the PCR ran near 0.85–0.88. That reversal mirrors the price action: hedgers who loaded up ahead of results have largely stepped back.
The Street remains cautious, though not outright bearish. The consensus sits at Hold, with 14 analysts in that camp and no recent upgrades. The most meaningful recent action came from UBS on April 21, where the firm kept its Buy rating but cut its price target from $210 to $183 — a signal of conviction tempered by lower expectations. Most of the broader target-cutting wave happened after the February earnings print, when firms including Barclays, Citigroup, Jefferies, and BMO all trimmed targets sharply. Since then, Barclays and Cantor Fitzgerald have nudged targets back up modestly in early March, aligning with the stock's partial recovery. The bull case centres on customer retention, upmarket traction, and a valuation that some see as undemanding at roughly 3x recurring revenue. Bears point to the soft 2026 revenue guide — management flagged a calendar anomaly weighing on recurring revenue growth — and question whether the upmarket momentum is durable. The P/E of 12.1x and EV/EBITDA of 6.8x are both marginally higher over 30 days, consistent with the price recovery rather than a re-rating. EPS momentum scores are solid — ranking in the 73rd and 76th percentiles on 30-day and 90-day measures — while the dividend score ranks in the 94th percentile, a reflection of capital returns rather than growth expectations.
Institutional ownership offers some stabilising context. Founder and CEO Chad Richison holds 12.4% of shares, and BlackRock added nearly 3 million shares in its most recently reported period, bringing its stake to 12.1%. Reinhart Partners added over 417,000 shares as of March 31 — a smaller but notably active position build. On the insider side, all recent transactions from February were award-and-sell sequences, which are routine for equity compensation programmes and carry limited directional signal.
With the Q1 results now cleared and the short overhang visibly deflating, the key watchpoint is whether SI continues its descent toward the pre-earnings 9–10% range — or whether new sellers step in to rebuild the position as the stock approaches the $130–$135 area where multiple price targets cluster.
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