With Lyft, Incâ€™s (LYFT) stock price closing below its IPO price for two days in a row, short sellers had gone into overdrive over the last three trading days and shorted over 38% of its 32.5 million share float. LYFT short interest is $856 million with 12.4 million shares shorted. At 38.19%, LYFTâ€™s Short Interest as a % of Float is the 27th largest domestic stock among companies with greater than $50 million worth of Short Interest.
And LYFT has the highest U.S. stock borrow fee for stocks with over $50 mm of Short Interest:
LYFT has instantly become the 2nd largest short in the U.S. Trucking Sector:
As a comparison to a recent IPO, Levi Strauss & Coâ€™s (LEVI) short interest grew steadily for several days and is now stabilizing and trending slightly downward. The initial momentum shorting is beginning to get covered as LEVIâ€™s stock price settles in around the $22/share level, 5% above its IPO price. LEVIâ€™s short interest as a % of float never spiked to anywhere near LYFTâ€™s levels, hitting 2.41% on April 2nd and now below the 2% level at 1.97%. Leviâ€™s short interest is at a unremarkable $19.1 million.
Looking back at SNAPâ€™s IPO which hit a high of $10/share over its IPO price on its second day of trading and subsequently traded lower over the next two weeks. We see that SNAPâ€™s short selling was not nearly as severe as LYFTâ€™s with SI % Float not topping 20% till 10 weeks after its IPO.
Weâ€™re seeing muted LYFT short selling today, which is reflected in the decrease in overall trading volume and LYFTâ€™s stock price up over 3.5% in mid-day trading. On the stock loan side we continue to see activity, but instead of just a scramble to borrow any stock within reach to cover immediate short sale deliveries, we are also seeing stock borrow returns of the most expensive borrows that were taken down over the last several days and replacing them with cheaper new stock borrows.
Stock loan supply is starting to stabilize and there is inventory ready to go. Stock borrow rates are reflecting this new abundance of LYFT shares and new stock borrow rates have been trending downward all day long. We are now seeing stock borrow fees at two-thirds of the levels we saw yesterday, with new and replacement stock borrows going at 65% to 75% fee levels. There will a slow and steady contraction of LYFT stock borrow rates as lenders are loathe to forgo such a windfall of revenues too quickly.
LYFT short interest is 12.4 million shares, over a third of its float, and there are still 3-5 million shares left to borrow today, with more stock being added to lendable inventory over the next several days. If todayâ€™s positive move in LYFTâ€™s stock price is a temporary rebound and long shareholders eventually continue the selling we saw earlier in the week, short sellers will have ample stock loan availability to join in on the selling. If todayâ€™s LYFT rally is part of an ongoing trend we can expect the shorter term momentum short sellers to cover their exposure first, leaving the longer term value based and technical shorts still in their trades. Once LYFTâ€™s stock price stabilizes, the remaining short interest will be more long term in nature and not easily moved off their marks. As the stock borrow volatility wanes, stock borrow rates will continue to decrease and cost of the longer term shorts will not be as exorbitant as they are today. We can expect LYFT to be a significant short in the market for long time, especially with analysts already posting â€śsellâ€ť recommendations less than a week after its IPO.
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Managing Director Predictive Analytics, S3 Partners, LLC
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