Kodiak AI heads into next week with a borrow market under extreme stress — every share in the lending pool deployed, a cost to borrow above 250%, and an earnings date just two weeks away.
The lending story is the standout this week. Availability has been running below 2% for most of May, meaning roughly one share remains available for every hundred already borrowed — a near-total lockout of the short side. The cost to borrow has risen tenfold since late April, climbing from around 25% annualised to 253.8% currently. That move happened fast: CTB was still at 24% on May 7, hit 161% by May 13, and has held above 250% all week. Borrowing KDK shares at these rates is an expensive commitment, which constrains new short activity even as the underlying conviction to short the stock appears strong. Short interest at 3.2% of the free float is not extreme in isolation, but the ORTEX short score of 82.8 — ranking the borrow-market stress in the top quintile across the universe — reflects how seized up this lending pool has become.
The cause of that stress matters. Short interest built sharply across the first half of May, rising roughly 20% over the month before trimming back slightly this past week. That build followed the May 7 earnings release, when the stock fell nearly 18% in a single session. The FINRA fortnightly figure puts official shares short at 8.6 million, higher than the ORTEX daily estimate, with days to cover at 5.5 — meaning at recent trading volumes it would take over a week to unwind the short book. That is a meaningful overhang for a stock already down 13% over the past month to $7.63.
Options positioning remains tilted toward calls rather than puts, though it has drifted slightly more defensive. The put/call ratio has edged up to 0.19 from a mid-April low of around 0.07, and sits modestly above its 20-day average of 0.16. The z-score of 0.87 suggests the move is noticeable but not alarming. The dominant story in the options market is still bullish-leaning relative to the lending market's distress signal — a divergence worth noting ahead of the June 11 earnings date.
The Street has not abandoned the bull case, but targets have come down hard. Citigroup, in the most recent action on May 13, trimmed its target to $11 from $13.50 while keeping a Buy rating. Chardan Capital, the most consistent voice, cut from $22 to $15 in early May after the earnings selloff — a 32% reduction in less than a week. TD Cowen also cut to $13 from $14 in March. The consensus target now sits at $12.40, still implying 63% upside from the current price of $7.63. Bulls point to progress in the Autonomy Readiness Measure — now at 84%, up from 78% — and the potential for revenue acceleration from the Marine Corps ROGUE-Fires integration. Bears flag a revenue estimate cut to $11.9 million from $14.3 million, with near-term delivery risk concentrated in the second half of the year and a capital raise likely on the horizon.
One data point cuts against the bear narrative. On May 8, the day after the earnings-driven crash, a 10% owner designated AAC II Holdings II LP purchased 769,230 shares at $6.50 — just under $5 million in a single block. That price represented the stock near its session lows after the selloff. No other insider transactions appear in the 90-day window, making this a lone but sizable vote of confidence from a substantial holder at distressed levels.
With the next earnings release confirmed for June 11, the question is whether the prior print's 18% drop has cleared the decks or set a new floor for expectations. The last five-day reaction following that event was a further 8.7% decline, suggesting the selloff extended beyond the announcement. The borrow market's near-complete lockup, combined with elevated CTB costs, means short sellers face real friction adding to positions into that date — even if the fundamental thesis remains intact.
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