USA Rare Earth heads into its May 14 earnings event with shorts in full retreat — yet the borrow market remains tight enough to keep the squeeze risk alive.
The short-interest story has been one of the most dramatic in the rare-earth space over the past six weeks. At the start of April, shorts held roughly 22% of the free float. That figure has fallen to around 13.3% today — a drop of more than 40% in a month. The unwind accelerated sharply around April 10, when the SI % of free float collapsed from the 22% range to roughly 16% in a single session, and has ground steadily lower since. With just over 22 million shares short and a days-to-cover of about 1.1 days (per the most recent FINRA data), there is no mechanical overhang forcing further unwinds — but the directional trend is unmistakably bearish-for-the-bears.
The borrow market complicates the picture. Availability is far from loose — the lending pool is nearly fully absorbed, with availability running tight enough to make new short positions expensive to establish and hold. Cost to borrow has eased from the late-April peak of around 1.83% to roughly 0.87% now, reflecting the short-interest unwind rather than any new supply of lendable shares. The ORTEX short score of 66.2, while slightly off its recent high, still ranks in the 2nd percentile of the universe — meaning almost every other stock is less heavily shorted by this composite measure. Options traders have edged more cautious too: the put/call ratio is running at 0.565, about 1.4 standard deviations above its 20-day average of 0.507, pointing to slightly elevated demand for downside protection heading into the print. That said, the PCR remains far below its 52-week high of 0.82, so this is measured caution rather than outright defensiveness.
The Street has turned notably more constructive as the stock has re-rated. Wedbush initiated coverage at Outperform with a $29 target in late April, then lifted that target to $35 yesterday — an unusually fast revision that signals conviction after a brief observation window. Canaccord Genuity held its Buy and moved its own target to $32 at the same time as Wedbush's initiation. The consensus mean target of $36.57 sits roughly 43% above yesterday's close of $25.55, a spread that reflects genuine bull case potential rather than stale anchoring — these are fresh targets from active coverage. Bulls point to USAR's vertically integrated, domestic mine-to-magnet positioning, meaningful government backing, and potential cost advantages from its gravity-based mining approach. Bears flag an EV/EBITDA multiple in the hundreds (the company is pre-revenue on a magnet basis) and a still-inexperienced workforce in an industry with scarce qualified labour. The stock's EPS surprise rank in the 94th percentile and analyst recommendation differential in the 98th percentile are striking for a pre-production business — these reflect estimate momentum rather than delivered earnings.
Institutional accumulation has been aggressive. BlackRock added over 6.4 million shares (now ~5.9% of the company) in the period to April 30, and State Street added 5.6 million shares in the same window. Vanguard built a new position of over 5 million shares in Q1. Inflection Point Asset Management came in with 14.5 million shares — nearly 6.7% of the company — a concentrated bet from a specialist manager. Chairman Michael Blitzer bought $2.1 million of stock in the open market in late January at around $21.44, a meaningful personal addition; the 90-day net insider position is a modest positive at $2.17 million in net purchases.
The two most recent price-reaction data points from company events offer a mixed but ultimately constructive pattern. A disclosure event on April 2 was followed by a 3.2% next-day gain and a 13% five-day return. An April 9 event saw a 3.8% next-day loss but recovered to a 9.8% gain over five days. Neither was catastrophic; both resolved to the upside within a week.
Close peers have had a choppy week. CRML fell 11% and UAMY dropped 5.8%, while MP Materials shed 3.6%. TMQ bucked the trend with a 12.5% weekly gain. USAR's own 6.8% weekly decline tracks the sector softness rather than a stock-specific deterioration. The question heading into the earnings call is whether the pace of the short unwind reflects genuine conviction from exiting bears — or simply a squeeze-driven technical exit that could partly reverse if the print disappoints.
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