CAKE heads into its May 28 earnings date with short interest at a six-week high and options traders the most bullish they've been all year.
Short sellers have been rebuilding positions aggressively. SI jumped roughly 12% between April 22 and April 24, lifting the short interest as a percentage of free float from around 17.4% to nearly 19.5% — the highest reading since late February. The position has held near that level through the week, closing Tuesday at 19.4% of float. For context, shorts had gradually unwound from a February peak above 19.5% down to the mid-17% range through most of April, before that sudden reversal. The FINRA fortnightly report confirms roughly 8.85 million shares short as of April 15, with days to cover at a substantial 9.5 — meaning it would take nearly two full trading weeks at average volume to unwind the short book. The ORTEX short score is running at 72, placing the stock in the 7th percentile for its sector — a reading that signals elevated short pressure relative to restaurant peers.
The borrow market, however, is not flashing distress. Cost to borrow is minimal at 0.57%, barely changed on the week and well below mid-March levels when it reached 0.80%. Availability is ample. That combination — large short position, cheap borrowing cost — suggests the rebuild reflects a deliberate fundamental view, not a technical squeeze dynamic. Options are telling the opposite story. The put/call ratio has dropped to 0.43, nearly 1.5 standard deviations its 20-day average of 0.65 and close to the lowest reading of the past year. After a prolonged stretch through March and early April when PCR sat consistently above 0.75, the shift toward calls over the past two weeks is striking. Equity traders have been buying the stock — up 16% on the month to $62.68 — while options participants have piled into upside exposure. The result is a direct contradiction: short sellers are adding, but options desks are positioned for further gains.
The Street is broadly constructive, but not uniformly so. Most recent analyst moves have been target raises: Oppenheimer lifted its price target to $72 on April 21 while keeping an Outperform, and Citigroup raised to $75 earlier in the month, maintaining Buy. The consensus target clusters around $64, only modestly above the current price — implying the stock has largely priced in the bullish cases already. The outliers matter: Morgan Stanley carries an Underweight with a $50 target, and Barclays holds Underweight at $51, both well below the current price. Those bear camps point to the same fundamental concern surfacing in the bear case: weakening same-store sales at the Cheesecake Factory segment (down 2.2% in the last reported quarter) and softer traffic at North Italia. The bull case rests on margin expansion — adjusted EBITDA grew 14.5% year-over-year, and restaurant-level margins are guided to widen further into FY26. Valuation is undemanding at roughly 15x trailing earnings and 14.2x EV/EBITDA, both of which have ticked higher over the past month as the stock rallied. The forward EPS growth rank sits in the 91st percentile, a standout figure.
Insider activity adds nuance. The founder and Chairman/CEO, David Overton, sold 4,655 shares on April 1 at $55.30, and sold a more substantial 19,247 shares in February at $58.67 — together worth around $1.4 million in aggregate. The CFO also sold 7,000 shares in late February at $65.70, close to the recent highs. The net 90-day insider position is a modest positive in share terms, but the character of recent trades is uniformly sell-side, with the CEO transacting at prices that now sit below the current market. Institutional ownership is stable: FMR (Fidelity) holds 14.3% and added nearly 1.9 million shares in the latest filing period, while BlackRock and Vanguard are roughly flat. Invesco quietly added 360,000 shares. The ownership base looks broadly supportive, with no large holder showing a meaningful exit.
Among close peers, CAKE has been the clear outperformer this week. WING fell 8.6% on the week and CMG dropped 8.8%, while CAKE added 1.4%. DRI and TXRH were roughly flat to down modestly. That relative strength likely contributed to the PCR shift toward calls — momentum traders chasing the divergence. The May 28 print will be the first test of whether the margin expansion story holds against the softening traffic backdrop, and whether the short rebuild that started this week was prescient or premature.
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