KRUS fell 17% this week to $46.61 — the hangover from a politically charged rally that now looks fully priced out.
The catalyst dates back to mid-May. Reports that Donald Trump had purchased a $5 million stake in the Japanese conveyor-belt chain briefly sent the stock soaring, momentum scores jumped, and the ORTEX short score — already elevated — dipped as shorts covered into the excitement. That tailwind has fully reversed. The stock is now down 17% over the past month and 10% in Monday's session alone, erasing virtually everything the Trump-trade narrative added.
Short interest tells the deeper story here. At 26.4% of free float, KRUS remains one of the most heavily shorted names in the restaurant sector — and that's after a meaningful covering cycle. Six weeks ago the figure sat close to 31.5% of float; it's been grinding lower since early May as shorts take profits into the slide. Days to cover from the latest FINRA fortnightly reads at 7.0, which is meaningful for a stock this size. The borrow market has quietly loosened in the past session: availability jumped sharply from around 55% to near 100%, suggesting a new wave of stock has entered the lending pool and reducing the mechanical squeeze risk that previously made re-shorting expensive. Cost to borrow has tracked lower in tandem, down 15% over the week to just 0.52% — historically low for a name with this level of short interest, and a signal that the lending market no longer views the position as particularly dangerous to maintain.
The ORTEX short score confirms the shift. It eased to 71.9 by Tuesday from a recent peak near 74.7 on May 26 — still firmly elevated in absolute terms, ranking in roughly the 6th percentile of all scored names, but directionally softening. That combination — a high absolute score moving lower — typically reflects shorts covering without new shorts rushing in to replace them.
The Street is not rushing to buy the dip either. TD Cowen's Andrew Charles reiterated Hold at $58 this morning, anchoring the top of the cautious analyst bloc. That $58 target represents a 24% premium to the current price — notable upside on paper, yet the firm can't bring itself to upgrade. Citi and Barclays both sit at neutral-equivalent ratings with targets between $68 and $78, which were set in April after the Q2 print and may not fully reflect the macro deterioration since. DA Davidson remains the lone bull, holding a $90 target and Buy rating from March, though that now implies near-doubling. The mean target across the group is $78.70 — almost 69% above the current price — but the breadth of hold-equivalent ratings at firms like TD Cowen, Citi, and Barclays is a better read on actual Street conviction than the raw target average.
The fundamental debate splits cleanly. Bulls point to 23% year-on-year sales growth to $80 million, a 4% rise in average ticket, and a new reservation system driving same-store traffic. Restaurant-level margins improved 90 basis points in the latest quarter, and a 20%+ net new restaurant growth rate remains intact. Bears counter that FY26 same-store sales guidance has been revised to flat — a sharp downgrade from earlier growth assumptions — while adjusted EBITDA faces pressure from labour costs, management transition risk, and the kind of consumer spending caution that hits discretionary dining first. The 30-day EPS momentum factor score is a perfect 100, which sounds bullish, but the 90-day equivalent sits at 2 — the gap between a recent estimate revision and the longer trend telling two different stories at once. Quality scores remain weak: negative return on assets, negative free cash flow per share, and a Piotroski F-Score of 4. Peers DRI and BJRI each fell 2-5% on the day, suggesting broad restaurant-sector weakness rather than anything company-specific.
Insider activity is stale — the most recent disclosed trades date to early February, when the CEO, CFO, COO, and several other officers sold small blocks at prices around $66-69. Those disposals carried near-zero trade significance scores and looked routine at the time. The stock is now well below those prices, but there is no fresh signal from the inside on whether management views the current level as an opportunity.
The next earnings event is slated for July 2. With the stock having now given back its Trump-related gains and short interest still running at roughly 26% of float — elevated but softening — the question heading into that print is whether the flat same-store sales guidance gets revised further, or whether early summer traffic data gives bulls something to work with.
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