Merlin, Inc. heads into its June 18 earnings with shorts in an aggressive rebuild, a borrow market that has eased significantly from its spring extremes, and options traders leaning unusually bullish for a stock down 26% over the past month.
Short interest has more than doubled in roughly five weeks. From around 1.85 million shares in late April, estimated short positions climbed to 3.86 million by June 2 — a 108% rise over the month and a further 34% jump in the past week alone. That pace of accumulation is hard to dismiss as noise. The move tracks almost perfectly with the stock's collapse from its prior trading range. Shorts have stepped in hard on the way down, and the week-on-week acceleration suggests that conviction has not faded.
The borrow market tells a more complicated story. Cost to borrow is still elevated at 40.6% annualised, but that figure masks a dramatic relief from the extremes seen in early May, when CTB peaked above 170%. The halving of borrowing costs since then, even as short interest has risen, points to new supply entering the lending pool rather than short covering. Availability has loosened alongside that move — now at 26.6% of existing short interest, up from roughly 10% in late May when conditions were at their tightest. That level is still tight, but the direction matters: new borrows are easier to obtain today than at any point in the past three weeks. Shorts adding here are doing so at a fraction of the cost that earlier entrants paid.
Options positioning is a sharp contrast to that bearish flow. The put/call ratio has dropped to 0.13 — well below its 20-day average of 0.18, and 1.4 standard deviations below the mean. That places it among the most call-heavy readings of the past year, with the 52-week PCR range running as high as 2.30. Options traders are not hedging defensively; they are making directional bullish bets. The divergence between a rapidly building short book and an options market tilted hard toward calls defines the central tension in MRLN right now.
TD Cowen initiated coverage on the stock today, June 3, with a Buy rating and an $11 price target — roughly 45% above the current close of $7.61. The firm joins Roth Capital, which maintained a Buy and raised its target from $15 to $25 back in mid-April. Both buys in the two-analyst consensus carry significant upside assumptions relative to current levels, and the $13 mean target reflects a Street that sees value well above where the stock is trading. However, TD Cowen's $11 target is notably more conservative than Roth's $25, suggesting less agreement on the magnitude of recovery than the uniformly bullish ratings might imply. The fundamental picture remains challenging: revenue came in at approximately $21.8 million against a net loss of around $129 million and negative operating cash flow near $49 million, leaving the company in pre-profitability territory with the EV sitting at roughly $524 million.
Institutional ownership is concentrated and largely recent. Alyeska Investment Group, a well-regarded long/short manager, disclosed an 8-million-share position as of early May — about 8.3% of shares outstanding — as a new holding. Floodgate Fund and Inflection Point also appear as new filers in the same window. The top three holders — Matthew George, Quiet Capital, and First Round Capital — control more than 40% of shares between them, leaving the free float limited and potentially amplifying price moves in either direction.
Earnings history adds another layer of context. The May 14 print was punishing: the stock fell 15.1% on the day and shed a further 8.6% over the following five sessions. The prior report in late March produced the opposite — a 4.5% gain on the day extending to 5.9% over five days. The pattern offers no reliable direction, only that the stock moves materially around results.
The June 18 print is the next hard stop. Between now and then, the story is whether the short rebuild pauses or accelerates as the date nears, and whether the calls-heavy options positioning reflects genuine conviction or a low-cost bet on a volatility event.
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