What traders are shorting ahead of earnings

A slew of familiar retail stocks are reporting earnings into heavy short bets this week.

GameStop, Aeropostale, and Staples are just a few of the consumer retail names announcing this week with over 10 percent of their shares outstanding on loan, according to data from Markit Equities Research. In fact, retailers make up about two-thirds of the 20 most shorted companies announcing in the next five days.

Scott Mlyn | CNBC

Gamestop, which long been a favorite for short sellers, is the second-most-shorted stock on this week's list with almost 22 percent of shares outstanding on loan. The bear case is that its model of selling video game discs will eventually be supplanted by downloads or streaming, making it the next major retailer (like Blockbuster Video) to succumb to the Internet.

Read More Why biotech attracts short sellers

Still, about 57 percent of analyst ratings assess the company as either a "buy" or "overweight" stock, according to FactSet. Gamestop's average price target is $50.28, and the stock currently sits at about $40 per share.

Aeropostale and American Eagle Outfitters also make the list of heavily shorted stocks announcing earnings this week. The retailers, which are direct competitors in the teen retail space, may both be suffering from a lack of new ideas.

"Without newness, the consumer has little need to update her wardrobe," Stifel Nicolaus analyst Richard Jaffe wrote in an Aug. 14 report on both companies and their competitors Urban Outfitters and Abercrombie & Fitch. "This will likely hold back sales in 3Q, in our opinion. Weak sales will likely drive increased promotions further pressuring results."

Read More The other group leaving teen retailers in the dust

American Eagle announced in May that it would shut down 150 stores over the next three years in light of weak sales.

Multiline retail stores also make an appearance on the weekly list with regional department store chain Bon-Ton ranking as the fourth-most-shorted stock announcing earnings this week. The embattled Sears Holdings will announce on Thursday, but its 10.1 percent of outstanding shares on loan pales in comparison to Bon-Ton's 21 percent.

Here is Markit's full list of the top 20 most shorted stocks announcing earnings this week:

% Shares Outstanding on Loan
1 Month % Change
Earnings Date
PDL BioPharma PDLI 22.5 6% Biotechnology 8/18/2014
Gamestop GME 21.8 -5% Specialty Retail 8/21/2014
Accuray ARAY 21.1 3% Health Care Equipment & Supplies 8/21/2014
Bon-Ton Stores BONT 21.0 27% Multiline Retail 8/21/2014
Fresh Market TFM 20.7 -5% Food & Staples Retailing 8/21/2014
Aeropostale ARO 19.4 -10% Specialty Retail 8/21/2014
Hibbett Sports HIBB 18.1 -2% Specialty Retail 8/22/2014
Jinkosolar Hldg Adr Rep 4 Ord JKS 14.2 11% Semiconductors & Semiconductor Equipment 8/18/2014
Buckle BKE 13.7 0% Specialty Retail 8/21/2014
Ja Solar Holdings Adr Rep 5 Ord JASO 13.6 10% Semiconductors & Semiconductor Equipment 8/20/2014
Childrens Place PLCE 13.4 -10% Specialty Retail 8/21/2014
American Eagle Outfitters AEO 12.4 -11% Specialty Retail 8/20/2014
Caci International CACI 11.3 -25% IT Services 8/20/2014
America's Car-Mart CRMT 11.1 8% Specialty Retail 8/20/2014
Staples SPLS 11.1 -2% Specialty Retail 8/20/2014
Tuesday Morning TUES 10.2 26% Multiline Retail 8/21/2014
Stage Stores SSI 10.2 20% Specialty Retail 8/21/2014
Sears Holdings SHLD 10.1 -1% Multiline Retail 8/21/2014
Real Goods Solar RGSE 9.6 -3% Electrical Equipment 8/19/2014
Renesola Adr Repstg Two Ord SOL 9.0 -4% Semiconductors & Semiconductor Equipment 8/19/2014
Markit Equities Research

One stock to note, PDL BioPharma, also made last week's list, but the company had to delay its earnings announcement to "get clarification" on accounting for some of its royalty payments from a recent acquisition, according to Markit analyst Simon Colvin.

The bear case for PDL BioPharma focuses on doubts about its business model as an owner of patents and royalty assets, according to RBC Capital Markets analyst Adnan Butt.

Read MoreShorts look to semiconductors, biotechs

—By CNBC's Everett Rosenfeld