Traders were betting against Papa John's long before the NFL's national anthem protests started

AP Images / Jack Dempsey

• Short interest on Papa John's stock has been hitting multi-year highs for months, dating back to well before the NFL season.
• The company saw shares drop 8.5% in a single day this week on weaker sales, which it blamed on NFL national anthem protests turning football fans off.
• One analyst says the rise of delivery apps that make local pizza joints competitive is a better explanation for Papa John's struggles.

The CEO of Papa John's made waves earlier this week when he blamed the NFL national anthem protests for his company's flagging sales.

As it turns out, those trading Papa John's stock had started souring on the company well before the NFL season even started.

The blue line in the chart below shows Papa John's short interest - or a measure of wagers that a share price will drop - as a percentage of shares on loan. It repeatedly hit multi-year highs as far back as the first quarter, when football fans were still planning their Super Bowl parties for last season, according to data compiled by IHS Markit.

The gauge then spiked to new highs in the period around May and June. And now, on the heels of the disastrous earnings report that kick started the whole controversy and sent the stock down 8.5% in a single day, short interest is yet again historically elevated.

Business Insider / Joe Ciolli, data from IHS Markit

Papa John's short interest was hitting multi-year highs well before the start of NFL anthem protests.

Based on how bearish traders had been getting on Papa John's shares for months, you can be sure they weren't counting on anthem protests to kill pizza sales.

So if the NFL protests aren't the reason for the struggles facing Papa John's, what is? Simon Colvin, an equity and credit markets analyst at IHS Markit, thinks that the rise of delivery apps may have something to do with it.

They've "leveled the playing field for independent operators," he told Business Insider. "These new platforms have the possibility to threaten the siloed model that the likes of Papa John's and Domino's have built over the years."

He notes that Domino's has also seen a "significant" pickup in short selling activity of late.

With all of this considered, combined with Pizza Hut's statement that the NFL isn't hurting its business, it appears Papa John's needs to come up with a new excuse.