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. 


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