Alaska Air Group enters the week of May 20 with a telling divergence: short covering that dominated the prior note has stalled, yet the stock keeps falling — down 6.5% on the week and 20% over the past month to $36.21.
The short-covering story from last week has largely played out. SI % FF has barely moved since May 12, edging from 10.7% to 10.5% — a near-standstill after the sharp drop from the mid-April peak of roughly 14.4%. Short sellers have stopped covering in any meaningful size. The borrow market offers no constraint on either side: availability runs near 194% of estimated short interest, and cost to borrow remains negligible at 0.52% APR, barely changed over the past month. With borrow this cheap and accessible, there is nothing forcing shorts to exit — and the fact that they haven't suggests they see room to run. The ORTEX short score has ticked up slightly to 60.6, consistent with elevated but unexcited bearish positioning.
Options traders are not particularly alarmed. The put/call ratio of 0.57 sits fractionally below its 20-day average of 0.57 — essentially neutral, with a z-score of -0.43. The contrast with early April is stark: the PCR peaked near 0.98 during the tariff-shock selloff and has since compressed to a range that implies neither panic nor protective hedging. Call volumes are running in line with puts. That tells a different story from the price action — options traders are not rushing to buy downside protection despite the stock's continued slide.
The Street has been cutting targets for weeks, and the last major move was a decisive one. Citigroup's John Godyn downgraded ALK from Buy to Sell on May 1, slashing the target from $51 to $32 — the most bearish single action across recent analyst activity. Other firms have been more measured: BMO Capital raised its target to $55 following the April earnings print, and UBS and Evercore ISI maintained Buy and Outperform ratings while trimming targets into the $54–$60 range. The consensus mean target of $57.44 implies roughly 58% upside from current levels, but that figure is increasingly skewed by bulls who haven't yet revised lower. The valuation is undemanding: price-to-book has compressed to 0.93x — below book value — and EV/EBITDA at 5.6x is consistent with distressed airline pricing. Forward EPS growth estimates remain positive on a year-over-year basis, ranking in the 81st percentile, though near-term EPS momentum scores are deeply negative, in the 5th–7th percentile range.
Among airline peers, the sector-wide pressure is real but ALK is taking more of it. ALGT fell 9.8% on the week and SKYW dropped 7.9%, while DAL and AAL held relatively better at -4.2% and -5.0% respectively. UAL shed 7.0%. Alaska is underperforming the group on a one-month basis — a pattern that started well before this week's leg lower and now has the stock trading below its early-2024 lows.
Earnings reactions have been consistently negative in recent history: the May 12 Q1 print produced a -1.3% day-one move and -7.3% over the subsequent five days. The prior two quarterly reports delivered -6.3% and -8.7% day-one moves respectively. With no confirmed next earnings date in view, the near-term focus shifts to any guidance updates or management commentary on capacity, unit revenue trends, and the macro demand backdrop — the gap between a $57 consensus target and a $36 stock price makes those data points the ones worth watching most closely.
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