KARO reports its Q4 2026 results today with one of the more striking pre-earnings positioning shifts in recent weeks: short sellers have cut positions by roughly a third over the past month, and the lending market has loosened dramatically.
Short interest tells the most interesting story heading into this print. At just 0.26% of the free float, bears have almost no meaningful position in the stock — and that level has shrunk fast. Estimated short interest fell 34% over the past 30 days and another 24% in the past week alone. Availability has opened up sharply alongside it: from a peak utilization reading near 50% in early April, the lending pool now has ample supply, with availability well above constraint territory. Borrow costs ticked up 60% week-on-week to 1.33%, but that number is low in absolute terms — this is not a stock where borrowing is difficult or expensive. The ORTEX short score of 30, near its lowest reading of the past two weeks, confirms the lack of short-side conviction. Overall, shorts have effectively vacated the position.
What the bulls and bears actually disagree about is a growth-rate question, not a quality question. The bull case centres on subscriber momentum — Cartrack's base has been growing steadily, and an estimated 15% subscriber expansion in FY26 would demonstrate that Karooooo's smart mobility platform continues to take market share in a fragmented telematics space. On the other side, bears point to competitive pressure and pricing degradation that could drag subscription growth below the levels needed to justify the current valuation. At a P/E near 19.7x and EV/EBITDA around 9.1x — both having eased over the past month — the stock is not priced for perfection. Analyst coverage, while thin at four buy-rated firms, is constructive. Roth Capital initiated at Buy with a $62 target in February, and UBS launched coverage at the same level in August. Morgan Stanley raised its target to $53 in mid-2025. All recent targets cluster in the $53–$62 range, well above the current $47.47 price, implying roughly 24% upside to consensus.
The EPS surprise factor score at the 99th percentile is notable. Karooooo has made a consistent habit of beating estimates, and that track record is baked into the setup. The January 2026 print initially produced a modest 2.7% one-day gain before extending to a 12.5% five-day rally — a pattern suggesting the market often needs a day or two to fully digest the results. The founder still holds 68.5% of shares, meaning the free float is thin and institutional ownership is concentrated among a handful of smaller managers.
The Q4 print is therefore less a test of whether Karooooo is profitable — it demonstrably is — and more a test of whether subscriber growth and margin delivery can close the gap between where the stock trades today and where analysts believe it belongs.
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