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Snap (SNAP) Short Seller Fees Said in 20% to 40% Range - S3 Partners
(Updated - March 7, 2017 12:16 PM EST)
Brokers are lending shares of recent IPO Snap (NYSE: SNAP) to short sellers at rates in the 20% to 40% range today, with short interest approaching $100 million, according to S3 Partners. Analysts think 10% to 20% of the initial offering could be shorted in the first week of trading, which roughly translates into $500 million to $1 billion of short interest right from the start. If history repeats, short sellers will need conviction in their trades.
In a recent note, Ihor Dusaniwsky, Head of Research, compared Snap to another recent IPO, Twilio (NYSE: TWLO).
"TWLO’s short interest climbed to $80 million in the first week after its IPO, which was 20% of the initial offering. By the middle of July, three weeks after the IPO, short interest continued to increase, and was $123 million or 25% of the offering," said Dusaniwsky.
"Short interest and TWLO’s stock price peaked in late September with short interest hitting $360 million and stock borrow rates ran into the high 50’s% and 60’s%. By the end of the summer, almost half of TWLO’s stock was being borrowed to cover short sales. Stock borrow fees increased to the mid 80’s% right before TWLO’s secondary offering on October 20th, but once shares settled from the 11.5 million share secondary, stock borrow fees dropped below the 10% level."
Dusaniwsky pointed out that Twilio short sellers were down $116 million, or 63%, in the first three months after their IPO. However, the short sellers were able to recoup those losses and more from October 2016 to March 2017.
Dusaniwsky concluded, "SNAP short sellers will certainly need conviction in their trades."
Tue, 07 Mar 2017 12:16:00 -0500
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