$UWMC might be one of the more interesting short squeeze setups going into the next earnings.
Not because “short interest = moon.”
Because the latest reported short interest is about:
94.8 MILLION shares short
Depending on the float calculation, that's roughly:
30%+ OF THE PUBLIC FLOAT SHORT
Let that sink in.
Almost 1 out of every 3 publicly tradable shares is currently sold short.
And the crazy part is the shorts have been ADDING.
April: 36.7M
May: 43.9M
June: 55M then 69M
July: 79M
August: 94.8M
So short interest went from about 37M to almost 95M in just a few months.
They didn't cover when the stock got destroyed.
They piled in harder.
That's why I think the NEXT EARNINGS could be the catalyst.
Last quarter the actual mortgage business wasn't dead.
UWM originated:
$39.7 BILLION
with a:
133 bps gain-on-sale margin
Revenue was around:
$888M
Then they got absolutely nuked by approximately:
-$603M in interest-rate derivative losses
That's what destroyed the quarter.
Not the fact that nobody was getting mortgages.
Now I'm trying to estimate Q3 using mortgage application data, rate locks, Fannie/MBA numbers, etc.
My current estimate is UWM does roughly:
$38B-$40B in Q3 originations
My number is about:
$39 BILLION
Maybe something like:
$25B purchase
$14B refinance
So despite everything that's happened to the stock, the core mortgage machine may still be doing close to $40B a quarter.
Now imagine this earnings report:
$39B originations
125-135 bps GOS margin
No new $600M derivative disaster
MSRs stable or positive
Balance sheet stabilizing after the $2.05B capital deal
My rough EPS estimate in that type of clean quarter is around:
$0.11-$0.13
That's where this gets interesting.
Because right now you potentially have:
94.8M shares short
30%+ short interest
and a stock trading around the $1.50 area.
If UWM reports another disaster, shorts win.
Simple.
But if they report a CLEAN quarter?
Now you have almost 95M short shares sitting in a stock where the bearish thesis suddenly looks less obvious.
That's the setup.
I'm not saying everybody needs to buy together and “make the shorts pay.”
That's stupid.
A real squeeze doesn't need coordination.
The company just needs to report something better than what the market is positioned for.
If earnings show:
✅ \~$39B originations
✅ 125+ bps margins
✅ \~$0.10-$0.13 EPS
✅ No massive hedge loss
✅ No liquidity surprise
✅ Decent forward guidance
then shorts have a decision to make.
Do you really want to stay short at $1.50 if UWM suddenly looks capable of generating $0.40-$0.50 of normalized annual EPS?
That's where covering can become fuel.
First you get fundamental buyers.
Then momentum traders.
Then some shorts start covering.
Then the stock breaks resistance.
Then more shorts cover.
That's how these things can snowball.
Again:
94.8 MILLION SHARES SHORT
30%+ OF FLOAT
That is a LOT of potential buying demand if the bearish trade starts going the wrong way.
My completely speculative post-earnings ranges:
Bad quarter / another management disaster:
$1.00-$1.30
Nothing special:
$1.40-$1.65
Clean quarter:
$1.75-$2.10
Good earnings + short covering:
$2.10-$2.50
Real squeeze / WSB insanity:
$2.50-$3+
Could it go under $1?
Absolutely.
This is UWMC.
Management already proved they are capable of finding landmines nobody even knew existed.
But that's also why the setup is asymmetric.
The market already expects problems.
The stock got crushed.
The dividend is gone.
Rates suck.
Oaktree capital is expensive.
And almost 95M shares are already betting against the company.
So what happens if the next earnings report isn't terrible?
That's the part I'm interested in.
For me the trade isn't:
“UWMC is an amazing company.”
It's:
**Can a company with nearly 95M shares short and 30%+ short interest surprise the market with one