Snapchat bears to pay high borrow fees

Snapchat bears to pay high borrow fees

Snap, the parent company of Snapchat, has seen its stock market value soar since listing on the New York Stock Exchange.

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. 

Thought Leaders

SmartStream RDU gears up for Mifid II challenge

SmartStream won the FOW Award for best new technology product in both the trade...

Total Return Futures - a real-life example for futurisation

Eurex won the FOW Prop Traders' exchange of the year award

ABN AMRO Clearing is optimistic about the future of proprietary trading

ABN AMRO Clearing won the award for proprietary traders' clearing firm of the...

Wematch: Shining a light on collateral and securities financing

Wematch discusses regulatory tailwinds, building liquidity and supporting banks...