PINS

How might the earnings miss affect the current short interest and potential short squeeze?

Created August 07, 2025 at 08:32 PM

Short‑interest and short‑squeeze outlook after Pinterest’s (PINS) earnings miss

1. What the earnings news means for the stock

Item	Result	Immediate market reaction
Revenue	Beat expectations	Shows demand is still solid, which can be a “good‑news” signal for long‑holders.
EPS	Missed expectations	Indicates higher costs or lower margins, which is a “bad‑news” signal for the bottom line.
Share price	↓ ≈ 10 % on the day of the report	A sizable drop that is larger than a typical “post‑earnings drift.”

The net effect is a sharp, negative price move despite the revenue beat. The market is penalising the weaker profitability more than rewarding the top‑line strength.

2. How an earnings miss typically influences short‑interest

Mechanism	How it works in this case
New short‑selling initiations	When a stock slides 8‑12 % on a single day, many short‑sellers view the move as a “confirmation” of a down‑trend and open fresh short positions. The miss on EPS reinforces the narrative that the company is struggling to convert sales into profit, prompting more traders to bet on a further decline.
Cover‑up of existing shorts	Some investors who were already short may reduce or close their positions to lock‑in the 10 % gain, especially if they fear a rebound from the revenue beat. This can temporarily offset the net increase in short‑interest.
Short‑interest ratio (days‑to‑cover)	Because Pinterest’s float is relatively modest (≈ 70‑80 M shares) and the stock is heavily traded, a 10 % drop can quickly raise the short‑interest ratio from, say, 5 % to 7‑8 % of float. That translates to roughly 5‑6 days‑to‑cover (vs. ~4 days before the miss).
Short‑interest reporting lag	Short‑interest data is reported bi‑weekly (or weekly for some brokers). The market will only see the full impact of the earnings miss on the official short‑interest numbers after the next reporting date. In the meantime, the “real‑time” short‑interest can be estimated from broker‑provided “short‑sell volume” feeds.

Bottom line: An earnings miss that triggers a 10 % sell‑off usually increases short‑interest in the short‑run, especially when the miss is on a key profitability metric (EPS). The revenue beat does not fully offset the negative sentiment, so the net effect is a net rise in the number of shares sold short.

3. Potential for a short‑squeeze

Factor	Why it matters for a squeeze
Current price level	After a 10 % drop, PINS is now trading significantly lower than its 2‑month average. If the price finds a floor (e.g., at a technical support zone around $15‑$16) and holds, any up‑side catalyst (e.g., a stronger‑than‑expected earnings revision, a strategic partnership, or a macro‑shift) could spark a rapid rally.
Short‑interest concentration	If the short‑interest ratio climbs above 6‑7 % of float (≈ 5‑6 days‑to‑cover), the pool of shorts becomes relatively thin. A sudden price rise forces many short sellers to buy back shares quickly, creating buying pressure that can out‑strip available supply—this is the classic short‑squeeze scenario.
Liquidity of the float	Pinterest’s float is liquid (average daily volume ≈ 10‑12 M shares). A squeeze is more likely when the daily volume is lower than the number of shares needed to be covered. If the short‑interest reaches ~5 M shares and the daily volume drops to ~3‑4 M, any upward move will have to be covered by a larger proportion of the daily volume, amplifying the price impact.
Catalyst potential	The revenue beat suggests that the business fundamentals are not completely broken. If management issues a guidance upgrade or announces cost‑cutting measures that improve margin outlook, the market could re‑price the stock upward quickly.
Technical triggers	A breakout above a key resistance level (e.g., the 20‑day moving average or a recent swing‑high) can trigger algorithmic buying and also attract short‑covering from traders who had set stop‑losses near that level.

Scenarios that could ignite a squeeze

Scenario	Likelihood	How it would affect short‑interest
Management upgrades guidance (e.g., EPS outlook +10‑15 %)	Moderate – depends on cost‑structure visibility.	Short sellers would be forced to cover quickly, especially if the upgrade comes after the price has already started to rise.
Macro‑positive news for ad‑tech (e.g., higher ad spend, lower CPI)	Moderate – sector‑wide tailwinds can lift PINS.	Same as above – a sector rally can catch shorts off‑guard.
Technical bounce at a strong support zone (e.g., $15)	High – many traders mark that as a “floor.”	If the bounce is strong enough, shorts who were “over‑leveraged” at the 10 % low will start covering, creating a cascade.
Further downside (another 5‑10 % drop)	Low to moderate – the market may already have priced in the earnings miss.	More downside would increase short‑interest but reduce squeeze risk (as the price is already low).

4. What to watch for next (practical monitoring)

Metric	How to track	What it tells you
Short‑interest ratio (bi‑weekly)	FINRA/NYSE short‑interest reports; Bloomberg short‑sell volume; broker‑provided “short‑sell” data.	Rising ratio → higher squeeze potential if price turns up.
Days‑to‑cover	(Short‑interest ÷ Average daily volume).	> 5 days‑to‑cover = thin float, higher squeeze risk.
Float‑to‑float turnover	(Daily volume ÷ Float).	Low turnover = any rally will need to be covered by a larger share of the float.
Technical levels	20‑day & 50‑day moving averages, recent swing‑high/lows, support zones.	Breakouts above resistance can trigger covering.
Management commentary	Post‑earnings conference call, press releases, SEC filings.	Guidance upgrades = upside catalyst.
Sector sentiment	Ad‑tech and digital‑marketing spend trends, CPI data, macro‑news.	Positive sector news can lift PINS even if company‑specific fundamentals are weak.

5. Bottom‑line take‑aways

Earnings miss → short‑interest likely rises – the 10 % price drop creates fresh short‑selling opportunities and adds to the existing short pool.
Short‑squeeze risk is modest now but can rise quickly – if the short‑interest ratio climbs above ~6‑7 % of float (≈ 5‑6 days‑to‑cover) and a bullish catalyst pushes the price above a key resistance level, the thin float can be covered rapidly, spurring a squeeze.
Key watch‑points – monitor the next short‑interest filing, watch for any guidance upgrade or sector‑wide ad‑spend tailwinds, and keep an eye on technical support/resistance zones. A stable or rising short‑interest combined with a price bounce is the classic set‑up for a short‑squeeze.
Risk management – If you are long, consider positioning near the support zone (e.g., $15‑$16) with a stop just below the next low; if you are short, be prepared to cover quickly if the price breaks above the 20‑day moving average or a clear upside catalyst emerges, as the squeeze can become abrupt.

In short: The earnings miss has likely inflated short‑interest on Pinterest, but the revenue beat leaves room for a positive catalyst. Should the stock find a floor and then break upward—especially if short‑interest stays high relative to the float—a short‑squeeze could materialise. Keeping tabs on short‑interest ratios, days‑to‑cover, and any forward‑looking guidance from management will be essential to gauge whether the squeeze is a looming threat or a distant possibility.