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Snapchat bears to pay high borrow fees
03 March 2017
Snapchat's share price has soared since its IPO on NYSE
Snap, the parent company of Snapchat, has seen its stock
market value soar since listing on the New York Stock
After debuting at $17 apiece on Wednesday, shares closed
yesterday at $24.48.
It gave the messaging app a market cap of $33 billion -
three times as much as social network rival Twitter.
The upward price action continued on Friday even while a
couple of research firms initiated coverage with price targets
below Snaps’s IPO offer price.
For short sellers, Snap's share price "pop" means
it’s going to be costly to load up on bearish bets
against the tech giant.
"One aspect of the "pop" to keep in mind – there is
only tiny short availability around the street," analysts at
Interactive Brokers said on Friday.
"Exactly zero securities lending desks are showing inventory
as they are saving it for internal clients, and even that is
most likely oversubscribed."
Interactive Brokers expects the imbalance in supply and
demand to establish a high equilibrium borrow fee when shares
become available Tuesday (IPO T+3).
"Share supply for shorting should be tight while the bulls
and bears fight it out, but it will certainly be interesting,"
IB analysts added.