Rising Short Bets Signal Investor Skepticism Toward SAP

A notable surge in bearish positioning against SAP shares is highlighting growing investor caution as the software giant approaches its next earnings report. Data reveals that short interest in the stock climbed by more than a quarter in March, coinciding with the share price hovering near its lowest point in a year.

Bearish Sentiment Intensifies

By March 13, the number of SAP shares sold short had increased to approximately 4.6 million. This represents a significant 26.2% jump from the level recorded at the end of February. The buildup in these positions indicates a growing cohort of traders is betting the stock's downward trend will persist. Since the start of the year, SAP's equity has shed roughly 27% of its value, trading just above its 52-week low.

A Complex Set of Challenges

Multiple factors are contributing to the sustained pressure on the share price. While SAP's full-year results were solid, the cloud backlog reported for the fourth quarter of 2025 disappointed the market. On a broader level, a key investor concern is whether the company can monetize new artificial intelligence technologies quickly enough to offset the rapid transformation AI is driving across traditional software business models.

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Legal uncertainties add another layer of complexity. A U.S. law firm is investigating a potential class-action lawsuit related to alleged securities fraud. This probe stems from inquiries by the U.S. Department of Justice, ongoing since 2022, regarding suspicions of overcharging government customers.

Analyst Outlook Remains Largely Positive

Despite the rising tide of short sales, the consensus among market analysts remains predominantly favorable. Of the covering analysts, two currently rate the stock a Strong Buy, eleven a Buy, and eight a Hold. The average consensus price target stands at $305.75. In mid-March, TD Cowen reaffirmed its Buy rating, and BMO Capital Markets maintained its Outperform stance.

From a strategic perspective, SAP is pushing forward with a fundamental shift in its business model. Starting in July 2026, the company plans to replace its classic subscription model with a consumption-based pricing structure for its AI services. For the current fiscal year, management has provided guidance for cloud revenue between €25.8 billion and €26.2 billion, alongside an anticipated free cash flow of around €10 billion.

The Upcoming Earnings Catalyst

All eyes are now on SAP's quarterly results, scheduled for release on April 23. On average, analysts are forecasting earnings per share of €7.31, which would mark an increase of about 16% compared to the prior-year period. Whether these figures will be sufficient to unwind the elevated short interest will likely depend heavily on the latest developments in the crucial cloud order backlog.

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