Jack in the Box Inc. (JACK): One of the Underperforming Stocks Targeted By Short Sellers

Jabran Kundi

Wed, May 14, 2025, 11:20 AM 3 min read

We recently published a list of 20 Underperforming Stocks Targeted By Short Sellers. In this article, we are going to take a look at where Jack in the Box Inc. (NASDAQ:JACK) stands against other underperforming stocks targeted by short sellers.

Short interest refers to the percentage of publicly available shares that have been sold short. It is an indicator used by many investors to determine how strong a company’s bear thesis may be. Due to the nature of short selling, the short interest has become a popular indicator among investors.

The reason it is given so much weightage is that people betting against a stock have usually done solid research and are confident of a company’s downfall. They take unlimited risk, so when big investors or the smart money shorts a stock, people take notice. They try to unearth the red flags that may have prompted the high short interest.

We decided to dig deeper and try to find out where smart money sees trouble ahead. To come up with our list of 20 underperforming stocks targeted by short sellers, we looked at the worst-performing stocks of the last six months and then ranked them by the short interest.

The front counter of the restaurant, with the menu illuminated in the background.

Short interest: 17.09%

6 months’ performance: -51.48%

Jack in the Box Inc. (NASDAQ:JACK) is a franchisor and operator of quick-service restaurants. The company operates restaurants under the Del Taco and Jack in the Box brands. Its stock has lost half its value in the last six months, but a case could be made that the negatives are now well priced in.

The company is highly leveraged, which is why investors are betting against a turnaround. However, the debt has a long-term maturity, and the company is doing a good job of increasing its cash reserves while keeping debt stable.

Jack in the Box Inc. (NASDAQ:JACK) is also focusing on its franchise business to increase royalties and ensure stable cash flows. It is the Del Taco chain that is causing headaches, but the management has a different type of solution for this problem. A restructuring could be on the cards, and a complete divestiture of the business isn’t being ruled out either. The firm could generate $200 million with a possible sale, which is a far cry from the $585 million it paid to take the business private in 2022.

Overall, JACK ranks 8th on our list of underperforming stocks targeted by short sellers. While we acknowledge the potential of JACK as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than JACK but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.