Workday heads into its May 26 earnings call with a striking shift in options sentiment — the same short position that dominated the prior preview now has a different counterpart.
The options market has reversed course sharply. The put/call ratio jumped to 0.86 on May 22, more than two standard deviations above its 20-day average of 0.76. That is a meaningful turn: as recently as May 19, the PCR sat at 0.70, well below the mean, with calls dominating the tape. Options traders who were betting against the short thesis just days ago have rotated into downside protection ahead of the print. The 52-week high on the PCR is 1.65, so there is room for further hedging — but the direction of travel has changed.
The short book, by contrast, has barely budged since the massive build that took shares short from roughly 20 million to 27 million around May 8–11. Short interest holds at 12.8% of the free float, up 1.4% on the week and still nearly 70% above its level a month ago. The ORTEX short score has been stable in the high 57s all week. The lending market continues to offer no friction: availability runs at 616%, meaning shares available to borrow outnumber shares already borrowed by more than six to one. Borrowing costs are 0.44%. This remains a deliberate fundamental short, not a squeeze setup — and the shorts have not flinched after May 21's 1.2% post-earnings move.
The analyst community is equally split heading into the second print. On May 22 alone, targets moved in both directions: Wells Fargo nudged its Overweight target to $185, Needham slashed its Buy target from $300 to $180 (a significant reset), and Citigroup trimmed its Neutral target to $139 against a current price of $128. The mean price target of $175 implies roughly 37% upside, but the distribution is wide. Bulls point to Workday's $160B total addressable market, AI adoption momentum, and FCF margin expansion. Bears flag delayed deal closures squeezing near-term subscription revenue, management transition risks, and the threat of AI disruption eroding Workday's competitive moat before it can fully monetise its own AI investments.
One institutional data point adds context. Hotchkis and Wiley added nearly 3.9 million shares in Q1, and First Eagle built a new position of 3.3 million shares, both in the quarter ending March 31. That is fresh institutional accumulation at prices well below current levels — a counterweight to the elevated short position. Among peers, INTU jumped 4.2% on May 22 while TEAM added 3.9%, suggesting the broader enterprise software tape was constructive on the day. WDAY gained 5.2% — broadly in line, though peers like INTU gave back nearly 19% on the week, a reminder of how quickly sector sentiment can shift.
The May 26 print will test whether the delayed deals that pressured Q1 subscription revenue have begun to convert — and whether AI-driven growth is accelerating fast enough to justify the institutional builds while the short book stays dug in.
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