zSpace, Inc. is one of the most extreme short-position unwinds in the OTC market this spring — short interest collapsed from multiples of the entire free float to near-negligible levels in under four weeks, while cost to borrow has climbed sharply and the stock itself has shed 90% from its early-May highs.
The short interest story here is genuinely extraordinary. At its peak on April 20, estimated short interest hit roughly 476% of the free float — meaning more shares were apparently borrowed and sold short than existed in the tradeable float, a situation that can arise in illiquid OTC names through chains of borrowed shares being re-lent. From that extreme, the position has collapsed almost entirely. By May 14, short interest had fallen to just 1.5% of the free float, a drop of roughly 99% from the peak. Daily estimated shares short are now around 31,000 — compared with more than 10 million at the April 20 peak. The FINRA fortnightly data, which lags somewhat, last reported 78,543 shares short as of April 30, broadly consistent with the trend unwinding rapidly through May.
Borrow costs tell a more complicated story than the short interest collapse might suggest. Despite the mass exit of short positions, cost to borrow has actually moved higher — running at roughly 65% APR as of May 12, up 63% on the week and up more than sixfold versus a month ago when it was around 10%. That may reflect the residual difficulty of sourcing the remaining borrow in an illiquid name, even as the headline short count has largely dissolved. Availability has loosened significantly as borrowers returned shares: the lending pool utilization has dropped from a 52-week peak of 92% on April 20 to around 21% now. That means roughly four shares remain available in the lending pool for every one already borrowed — a much more relaxed borrow environment than a month ago, despite the elevated rate.
The price action is the backdrop against which all of this occurred. The stock ran from around $0.12 in early April to a peak above $7, a move of nearly 60x, before collapsing back to the current $0.195 — a loss of roughly 97% from the high. The 1-month price change in the snapshot reads –90%, but even that understates the severity of the full round-trip. The week ending May 16 shows a 39% gain from Monday's open, though Friday alone saw a –15% reversal. Closest correlated peers in the education sector moved very differently: DUOL rose 3.8% on the week, CHGG fell 12%, and SUPX surged 43% — the latter suggesting there was broader speculative activity in micro-cap education names this week, rather than anything ZSPC-specific.
Insider activity adds a layer of context. The CEO, CFO, and CMO all sold shares on April 7 at $0.074 — before the major price spike — with values in the hundreds of dollars given the then-tiny share price. More notable is AQR Capital Management, which filed as a 10% owner and bought 860,716 shares on April 15 at $0.071 for approximately $61,000. By April 30, AQR's reported holding had grown to 187,618 shares, reflecting a reduction after the buy — consistent with profit-taking into the spike. These are small absolute dollar amounts, reflecting the stock's ultra-low share price throughout.
The ORTEX short score has declined to 48.7 from a recent high of 54.3 on May 1, registering a move toward the middle of the 0–100 scale. The days-to-cover rank sits in the 92nd percentile — meaning the remaining short interest is high relative to trading volume, even though the absolute position is tiny. With no upcoming earnings event flagged and market cap data absent from the snapshot, the main variable now is whether the cost to borrow remains elevated despite the thinned short interest, and whether any residual short holder in this deeply illiquid name chooses to exit or add.
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