McDonald's is navigating a rough patch after its Q1 earnings miss. Seven analyst firms slashed price targets in two days. Short sellers responded — fast.
The wave of analyst target cuts defines this moment. On May 7–8, seven firms lowered their price objectives on MCD, headlined by Wells Fargo dropping to $320 from $355 and Barclays cutting to $350 from $380. JP Morgan followed on May 11, trimming to $305 from $325 — even while maintaining an Overweight rating. Every firm that cut kept its positive rating in place, but the consensus price target mean now sits at $332, roughly 21% above the current close of $274.60.
The bear case is straightforward: executional missteps dented US McOpCo margins, and franchisee profitability is under pressure. International markets face a tough comp from last year's Minecraft promotion. The bull case argues that the McValue 2.0 rollout and a FIFA World Cup partnership position the brand for a second-half rebound.
The earnings reaction triggered immediate positioning changes in the lending market. Short interest jumped 21.7% in one week to 1.41% of free float. That level — just over 10 million shares short — remains modest in absolute terms. But the pace of change is notable.
Cost to borrow climbed sharply alongside the demand. The rate hit 0.64% on May 8, its highest point since April, before easing back to 0.46% by May 11. The one-week change still stands at +33.5%. Availability in the lending pool remains very loose — this is not a supply-constrained borrow market. The short interest buildup reflects conviction, not forced positioning.
Here the data diverges from the bearish flow. The put-call ratio dropped to 0.80 on May 11, sitting 2.74 standard deviations below its 20-day mean of 0.92. That is the most bullish options reading since the 52-week low of 0.775. Options traders are buying calls into the selloff — a sharp contrast to the short sellers adding pressure on the other side.
This divergence is the central tension in MCD right now: short sellers positioned for further downside, options flow leaning the other way, and a wall of analysts maintaining positive ratings with targets well above the current price.
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