AXTI has become one of the most talked-about names in small-cap semiconductors. A 91% one-month rally — propelled by a blowout Q1 earnings print and a media narrative around "unobtainium" compound substrates — has left short sellers nursing losses and options traders scrambling for cover. The interesting tension this week is not the rally itself but how the bears are responding to it.
Short sellers are not capitulating. At 19.3% of the free float — based on ORTEX estimates as of May 12 — short positioning remains substantial and actually rose 6.3% in a single session. The week-over-week reading ticked down 5%, reflecting some covering after the stock's April 30 earnings surge of 35% in a day. But the 30-day trend tells the opposite story: SI has climbed roughly 13.9% over the past month, meaning new short sellers have been adding into the rally rather than fleeing it. Estimated shares short now sit around 8.6 million. That is a large, active short book on a company whose stock has gone parabolic.
The borrow market tells a similarly charged story, though conditions are looser than the price action might imply. Cost to borrow has tripled over the past week to 0.39% — a sharp move in percentage terms, but still a very low absolute rate. Availability is far from tight: the lending pool remains wide open relative to what is already on loan, reflecting the dramatic loosening since early April when borrow was far more constrained. That availability headroom matters — new short interest can be added without a squeeze-driven bid on borrows. The options market, however, reads more defensively. The put/call ratio has jumped to 0.83, nearly 1.8 standard deviations above its 20-day average of 0.52 and close to its 52-week high of 0.89. That is a notable shift from the call-heavy positioning seen through most of April, when the stock was in full momentum mode. Options traders have rotated toward protection.
The Street is divided, with the split reflecting a genuinely unusual valuation challenge. Wedbush raised its target twice in rapid succession after the earnings beat — first to $80 at end of April, then to $93 a week later — while maintaining its Outperform rating. B. Riley Securities kept a Neutral rating with a $21 target as of February, though that figure is now deeply stale against a $122.90 stock price and should be treated as placeholder rather than guidance. The consensus mean target of $87.75 now sits meaningfully below the current price, flagging a Street that has not fully caught up with the re-rating. The bull case centres on export licence wins for indium phosphide substrates and the company's niche position in compound semiconductor materials with limited global competition. The bear case is direct: at 264x trailing earnings and an EV/EBITDA north of 194x, almost any execution stumble reprices the stock sharply. EPS momentum factor scores are running at the 100th percentile — the recent beats have been exceptional — but an EPS surprise rank of just 29 suggests the pattern of beats is not as consistent over a longer horizon.
Insider activity from two months ago deserves a mention because the volume was substantial. CEO Morris Young and CFO Gary Fischer both sold in mid-March, with Young offloading roughly 194,000 shares across two days for over $6 million in proceeds, and Fischer selling around 89,000 shares for over $4.5 million. Those sales occurred with the stock between $36 and $51 — well below current levels — meaning the sellers left significant gains on the table. The 90-day net insider figure shows roughly 1 million net shares sold for over $43 million in total value. Founder-level selling at scale into strength is worth watching, even if the timing has, in retrospect, been early. A new leveraged ETF — REX Shares' 2x AXTI product — launched earlier this month, which adds a mechanical demand and volatility dynamic on top of the underlying stock.
Peer context reinforces the breadth of the move. WOLF gained 47% on the week, and HIMX gained 57%, so this is partly a sector-wide repricing of compound and specialty semiconductor names. AXTI's 14% week-on-week gain looks almost modest in that context — though its 91% monthly move outpaces both. The next earnings date is July 30. Between now and then, the key question for positioning is whether the short book — sticky at nearly 20% of float — starts to compress as the stock holds elevated levels, or whether continued insider selling and a Street consensus well below market price create enough gravity to bring new bears back in.
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