Alaska Air Group heads into its May 12 Q1 earnings report with a notable shift underway: short sellers have been unwinding positions sharply, while options traders have swung to their most bullish positioning in months.
The most striking move this week is in short interest. Shorts have retreated hard — SI % of FF fell roughly 14% over the week to around 11.8% of the free float, after peaking near 14.5% in mid-April. That's a significant covering run, reversing a build that had pushed short positions to their recent high. Despite the easing, 11.8% remains elevated for an airline, confirming the thesis has genuine conviction behind it even after the unwind. The borrow market itself signals little urgency from remaining shorts: cost to borrow is barely above 0.47% — essentially nothing — and availability is comfortable, meaning there is no squeeze pressure forcing anyone's hand. The retreat looks voluntary, not mechanical.
Options positioning has flipped in the other direction, and the contrast is sharp. The put/call ratio has dropped to 0.57, more than 1.3 standard deviations below its 20-day average of 0.81. That is the most call-heavy positioning of the past year, with the 52-week low at 0.26 as reference. After months of predominantly put-side hedging — the ratio ran above 1.0 through late March and into early April — options traders have pivoted meaningfully toward upside exposure ahead of the May 12 print. The PCR in mid-April was still above 0.90; it has nearly halved since. That's a rapid sentiment rotation, not a gradual drift.
The Street reflects a similar tension between near-term caution and longer-term belief. The mean analyst price target is $58.75 against a current price of $39.79 — implying roughly 48% upside — but the recent trail of target cuts tells a more complicated story. Goldman Sachs trimmed to $61 from $68 in early April. Evercore ISI lowered to $60 from $65 the following week. Susquehanna cut to $50 from $55. Only BMO Capital, which initiated in late March, raised its target — to $55 from $42.50 — standing out as the constructive outlier. The direction of travel has been downward across the board, even though all major firms have maintained positive ratings. Consensus remains bullish; the question is how much of the target-cutting has finished. EPS surprise ranks in the 70th percentile and forward EPS growth ranks in the 76th, suggesting the fundamental picture has held up better than the stock's slide implies.
Institutional ownership adds a layer of interest. American Century added over 1.1 million shares in Q1, Capital Research and Management added 1.47 million, and Columbia Management added 1.43 million — three meaningful builds by active managers in the most recent quarter. Vanguard and BlackRock also added smaller increments. The insider picture is less decisive: the CFO and CEO both sold shares in February, but at prices around $55-57, well above the current $39.79. Those sales look like scheduled award-related transactions rather than directional calls at these price levels.
The earnings reaction history deserves attention. The most recent comparable print, from April 21, produced a 1-day decline of 6.3% and a 5-day drop of 8.6%. A second event logged for the same period shows a similar 8.7% one-day fall. Heading into May 12, the stock has already given back 4% on the week, so some softness may already be priced in — though the options market's call-heavy tilt tells a different story about near-term positioning. The short score at 60.4 remains elevated by historical norms, and peer airlines also had a rough week — SKYW fell 12%, ALGT dropped 9%, and LUV slid 7% — suggesting broad sector pressure rather than Alaska-specific news. The gap between where analysts think the stock belongs and where it is trading narrows the framing heading into May 12: the result will either validate the covering run or test whether the remaining short base finds company.
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