MCD Stock Ticks Lower Overnight: McDonald’s Faces Earnings Test As Short Bets Hit 52-Week High

McDonald’s bearish bets surged 64% ahead of its third-quarter earnings.

• According to S3 Partners, bearish bets on McDonald’s have increased while bullish positions have declined. 
• Long exposure fell 14% to $24.3 billion, while short exposure jumped 64% to $3.54 billion.
• For Q3, analysts expect McDonald’s to post $7.28 billion in revenue and $3.38 in EPS. 

McDonald’s Corp. (MCD) stock edged lower overnight as investors weighed the upcoming third-quarter (Q3) earnings report against rising bearish bets. Short exposure has surged 64% to a 52-week high of $3.54 billion, while the stock’s rebound from $230 to $265 has triggered only limited short covering, signaling persistent investor caution. 

McDonald’s stock edged 0.4% lower overnight, ahead of Wednesday. The stock has been gaining for the past four weeks after eight straight weeks in the red. 

McDonald’s Bullish Exposure Continues To Shrink

S3 Partners data shows that over the past year, more investors have bet against McDonald’s while bullish positions have declined. This suggests the stock’s recent recovery has not yet convinced many investors to close their bearish bets. 

McDonald’s long-to-short ratio has fallen 48% in the past year to 6.8x, close to its October low of 6.6x. It is also well below December’s peak of 14.0x, showing that bearish bets have increased compared to bullish positions. 

Active long exposure currently stands at $24.3 billion, down 14% over the 52-week period. S3 Partners said that, though this measure has improved from its October bottom, the recovery has done little to reverse the longer-term deterioration. 

Meanwhile, bearish bets on McDonald’s have risen 64% to $3.54 billion, the highest level in a year. The number of shares sold short has also increased, showing that investors are actively betting against the stock rather than just seeing the value of their existing bets rise. 

MCD’s Stock Recovery Has Yet To Trigger Major Short Covering

Short interest in McDonald’s has risen from about seven million shares to 13.33 million over the past 52 weeks, a period when the stock weakened. The buildup suggests bearish traders continued to increase their exposure as shares declined. 

McDonald’s shares have climbed from around $230 to $265, but short interest has retreated only slightly from its recent peak. McDonald’s stock gained momentum over the past few weeks on a dividend increase, new value deals, and investor interest. The company raised its quarterly dividend from $1.86 to $1.93 per share. Promotions such as the $8 Quarter Pounder meal and the return of Pokémon Happy Meals also raised hopes of stronger customer traffic. 

S3 Partners said Q3 earnings on Wednesday could test whether the stock's recovery has enough momentum to shift investor sentiment. According to Fiscal.ai, analysts project $7.28 billion in revenue and $3.38 per share in earnings. 

MCD Stock: Retail Stance 

On Stocktwits, retail sentiment around the stock remained ‘bearish’. 

A user said the stock may be overbought after its strong two-week rally, with a high RSI suggesting a possible pullback.”I would advise that you would not buy anymore right now and see what happens because if we get a pop that might be it and then we might see a slow slide down to 255. If this happens, I recommend buying at that point.”

Another user said, “My Quant Agent has a target of $300 for MCD in one month.... This is quite aggressive!”

MCD  stock has declined 13% year-to-date.  

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