It's been a difficult September for PLS Group Ltd (ASX: PLS) shareholders, despite the lithium miner's impressive gains over the past year.
The stock has climbed around 85% over the past 12 months, but has fallen more than 22% since closing at $5.48 on 1 September.
Today is offering some relief, though, with the PLS share price rising 2.79% to $4.245 in mid-afternoon trade.
However, despite the company's improving financial performance, short sellers are still betting heavily against the stock.
In fact, PLS remains one of the most heavily shorted stocks on the ASX.
So, why are traders betting against the lithium miner?
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The bears are still circling
According to the latest short-selling data, PLS is currently the 9th most shorted stock on the ASX.
As of 16 September, approximately 11.07% of its shares were held in short positions, representing more than 357 million shares.
That's a substantial amount of money betting on the lithium miner's share price falling further.
For those unfamiliar, short sellers borrow shares and sell them, hoping to buy them back at a lower price and pocket the difference.
With lithium prices still volatile, another pullback could take a decent chunk out of PLS' earnings.
That's something to watch as the company prepares to lift production again in FY27.
October could be a big test
PLS announced today that its September quarterly activities report will be released on 27 October.
The update will show how the miner is tracking against its FY27 production targets.
The company is forecasting production of between 1.03 million and 1.10 million tonnes this financial year, up from 879,500 tonnes in FY26.
Much of that increase will come from the restart of its Ngungaju processing plant, which began ramping up in July.
PLS is also expecting operating costs of between $575 and $625 per tonne, alongside capital expenditure of $620 million to $685 million.
Personally, I'll be watching production, realised lithium prices, and cash generation closely.
The short interest is already above 11%, and a solid quarterly result could put some pressure on those betting against the stock.
Could short sellers get caught out?
While short sellers are betting on further weakness, analysts are pointing to a considerably higher share price.
According to TipRanks, the average 12-month price target from 12 analysts is $5.55, implying about 31% upside from today's price.
7 analysts have buy ratings, 3 recommend holding, and 2 have sell ratings.
With so many shares currently shorted, I think the next few weeks could be very interesting.
