CarMax heads into the week of April 28 carrying the bruises from a brutal earnings reaction — and the question now is whether shorts are banking profits or simply stepping back before the next round.
The short interest data tells a story of rapid unwinding. SI % of free float has dropped from a peak near 12.7% in late March to roughly 10.5% now — a meaningful compression over six weeks. The sharpest leg lower came around April 9-10, when shorts trimmed almost two full percentage points in a single session, cutting from above 12.6% to just above 11.1%. That move coincided with the post-earnings period. Another step down landed this week, pushing the float percentage below 10.6%. On a one-week basis, short shares fell more than 5%. Sellers of the stock on the short side are clearly reducing exposure, not adding to it.
The borrow market reflects the same loosening trend. Cost to borrow is running at a modest 0.32% annualised — cheap by any measure for a name carrying this level of short interest. Borrow availability is wide, with the lending pool far from tapped out; the 52-week peak on the utilization gauge was 12.57%, versus roughly 4.6% today. That combination — retreating short interest, cheap borrow, plenty of capacity — means there is no mechanical squeeze pressure here. If new shorts wanted to rebuild, the infrastructure for it exists. For now, they are not doing so at scale.
The Street is lukewarm at best. Both Barclays and JP Morgan maintained Underweight ratings in the days immediately after the April 14 earnings print, though JP Morgan did nudge its target from $28 to $35. With the stock at $38.64, that target still implies the shares are overvalued from JPM's vantage point. Barclays went the other way, trimming from $28 to $26. The consensus rating overall lands at Sell, with four Underperform calls in the mix. The mean price target of around $41.70 sits modestly above the current price, but the bear-side targets well below $38 suggest the average is being pulled higher by more optimistic neutral-to-positive views. Evercore ISI has repeatedly nudged its In-Line target higher through April, most recently to $45, while Baird holds an Outperform with a $48 target — the lone clearly bullish voice. EPS momentum scores rank in the 6th percentile for 30-day and 15th for 90-day, flagging that forward earnings estimates have been drifting lower. The stock trades at 15.7x trailing earnings, a multiple that has expanded slightly over the past week even as the price slipped.
The April 14 earnings reaction deserves its own paragraph. CarMax fell 17.5% on the day of the print and extended losses to roughly -20.5% over the following five sessions — one of the largest single-quarter earnings drawdowns the stock has recorded in recent history. That kind of move goes some way to explaining the short interest dynamic: a portion of the short base was likely positioned ahead of results, covered into the decline, and has not yet rebuilt. The next scheduled earnings call falls on June 17. The implied vol premium that tends to build ahead of KMX reports will therefore start drawing attention again in the coming weeks, particularly given what just happened.
Options positioning is broadly balanced. The put/call ratio is running at 0.84, barely above its 20-day average of 0.82, with a z-score close to flat. There is no pronounced rush for downside protection here — a slight contrast with what you might expect after a 20% earnings drawdown. The 52-week high on the PCR was 0.89, reached around the April 2 tariff shock; the current reading is not near that extreme. Peer moves this week were mixed: LAD was roughly flat on the week while AN and ABG dropped around 2-3.5%, and CWH fell more than 5%. KMX's -1% week was relatively contained in that context.
The RSI sits at 40.6 — oversold territory is close but not yet touched. The stock is down 5.4% on the month and broadly flat year-to-date. With the short base still at a meaningful 10.5% of float despite the recent trim, and June 17 earnings on the calendar, the dynamic to track is whether shorts continue to unwind into further price weakness, or whether the stock's failure to recover meaningfully from the April shock invites fresh positioning ahead of the next quarterly test.
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