Toast Gaps Down 15% After Q1 Miss

TOST suffered its worst single-day drop in months, shedding nearly 15% on Friday after Q1 results disappointed. The stock closed at $25.05. That's the dominant story this week — earnings-driven repricing, with options markets and analyst desks scrambling to catch up.

Options traders were positioned for bad news before the print arrived. The put/call ratio jumped to 0.73 on May 8th — more than 2.5 standard deviations above its 20-day average of 0.60 — the most defensive reading in well over a year, and close to the 52-week high of 0.82. That was not paranoia; it proved prescient. The Q1 report landed on May 7th after the close, and the stock gapped down sharply the following morning. Friday's 14.7% fall followed Thursday's initial drop of roughly 11.5%, meaning the full earnings reaction wiped close to a quarter off the stock over two sessions.

Short interest tells a slightly more nuanced story. At roughly 5.9% of the free float, shorts were already meaningfully positioned before results — that level had been running between 5.9% and 6.1% for most of April, a notable build from around 5.3% in late March. The post-earnings week actually saw SI ease modestly, down about 3.8% in share terms over the past five days as some bears covered into the decline. Borrow costs remain negligible at 0.44% — barely above the general collateral rate — and availability is far from tight. There is no squeeze dynamic here; this looks like a straightforward directional short trade, not a crowded borrow market.

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