Blue Owl stock may short squeeze as golden cross emerges amid turnaround

Blue Owl stock has staged a strong comeback in recent months, climbing from a low of $7.60 in April to around $11.85 currently. The rally could have further room to run after the stock formed a golden cross and a bullish flag pattern, while fading jitters across the AI sector could provide an additional tailwind.

Blue Owl stock technical analysis points to more gains

The daily chart shows that the OWL stock has rebounded from a low of $7.6 in April to the current $11.85. It formed a golden cross pattern on August 14 this year. This pattern is formed when the 50-day and 200-day Weighted Moving Averages (WMA) cross each other. 

The stock moved above the important resistance level of $10.55, its highest point in May and June this year. It has jumped above the Supertrend indicator, a sign that bulls are in control. Also, it has formed a bullish flag pattern, a common continuation sign.

Therefore, the stock may continue rising, with the next key target to watch will be at $15, which is about 27% from the current level. On the flip side, a move below the support level of $10.5 will invalidate the bullish outlook.

OWL stock chart | Source: TradingView

Blue Owl is implementing a turnaround strategy

OWL stock is recovering after having one of the steepest crash earlier this year as cracks in the private sector industry emerged. Its recovery has coincided with that of other top companies in the industry. 

For example, Ares Management’s stock has jumped by over 50% from its lowest point this year. Apollo Global Management has soared to $134, up by 35%, while KKR and Blackstone have also risen by double digits. 

The company’s challenges started last year when the company attempted to merge the publicly traded Blue Owl Capital Corporation (OBDC) with the private Blue Owl Capital Corporation II (OBDC II). After that, the company sold $600 million in secondary portfolio near par and limited some redemptions.

The company is now implementing a turnaround strategy by reducing its dependence on direct lending, accelerating its growth in real assets and AI infrastructure, and expand its GP strategic capital. 

In its recent results, the management noted that its real assets platform have continued growing and now holds about 30% of its assets under management (AUM). This growth helped it to boost its revenue by 27%.

As part of this approach, its direct lending now accounts about 35% of its AUM, compared with nearly half earlier this year. In total, its AUM jumped by 12% in the second quarter to over $319 billion, with permanent capital rising by 10% to $225 billion. Total revenue jumped by 7% to $753 million. The management said:

“As we look at the first half of 2026 across Blue Owl, a period spanning the most acute headline noise and elevated redemptions for non-traded BDCs, we raised more than $16.5 billion of equity capital across the firm or more than 40% of our last 12-month total.”

Blue Owl has also become highly undervalued, with the forward price-to-earnings ratio being 13, much lower than the S&P 500 Index’s average of 22. It is also a highly shorted company with a short interest of 16%, meaning that it may have a short squeeze soon.