Domino's Pizza Enterprises (DMP.AX) shares jumped more than 11% in Sydney trading on Thursday after the company reaffirmed its full-year earnings guidance, triggering a sharp squeeze among short sellers who had bet against the stock.
The Australian-listed operator, which holds the title of the most shorted stock on the ASX, issued a market update stating that recent changes to its sales strategy are successfully improving profitability for its franchisees.
The confirmation of profit targets provided a direct catalyst for the reversal, forcing short positions to cover as the stock price moved rapidly higher.
This development marks a significant shift in sentiment for the company, which has faced skepticism from investors regarding its ability to maintain margins amid competitive pressures.
The reaffirmation suggests that management's strategic adjustments are yielding tangible results for the franchise network, countering bearish narratives that had driven the heavy short interest.
Context from recent trading indicates that franchise store operators have been increasing spending on ingredients, a signal that input costs are being managed effectively or passed through without damaging demand.