Uber Technologies Inc (UBER) and Lyft Inc (LYFT) shares prices had been strengthening recently, but after UBER reported a larger than expected $5.24 billion second quarter loss, both stocks are down for the day. UBER and LYFT are the largest shorts in the domestic Trucking Sector and todayâ€™s performance will certainly increase the amount of short selling in both stocks.
Both UBER and LYFT had large increases in their shares shorted this week ahead of their earnings announcements. UBER shares shorted increased by 2.2 million shares, +5.70%, and LYFTâ€™s shares shorted increased by 1.1 million, +5.44%. UBERâ€™s short interest is now $1.73 billion; 40.16 million shares shorted or 21.01% of its float. LYFTâ€™s short interest is $1.37 billion; 22.01 million shares shorted or 58.89% of its float. UBERâ€™s stock borrow fee is only 1.22% while LYFTâ€™s is 14.10% due itâ€™s high short interest relative to its float.
We see no near-term short selling restrictions for UBER short selling as there is ample stock loan supply to satisfy locates albeit at slightly higher than general collateral rates. On the other hand, LYFT short selling may be affected by lack of lendable stock loan supply. We are seeing rates on new stock borrows topping the 20% fee level today, signaling that the â€śeasyâ€ť borrows have all been taken down and lenders are charging premium rates for the remaining shares they have left in their lending programs.
UBER short sellers were down -$52.4 million in year-to-date mark-to-market losses prior to todayâ€™s almost -7% price drop. UBER shorts are up +$118.5 million in mark-to-market profits today, bringing their year-to-date P\L back into the positive side of the ledge, up +$66.1 million, +4.82%, on the year.
LYFT short sellers are also having a profitable day, up +$77.0 million in mark-to-market profits on todays -5.6% price drop. LYFT shorts were already up for the year and todayâ€™s windfall brings their year-to-date mark-to-market profits to +$117.9 million, +10.30% on the year.
We are seeing additional short selling in both stocks today, with UBER being the more active of the two. With both shorts profitable on a mark-to-market basis year-to-date there is minimal chance of a short squeeze unless both stocks rally significantly. There is a chance we may see some short covering if LYFTâ€™s stock borrow rates continue to climb, but with over 4 million shares still available to borrow it will take a while before financing rates get excessively expensive relative to Alpha. We should expect continued downward price pressure due to active short selling in both UBER and LYFT for the short term.
Want deeper insight into the above analysis?
Contact:Â [email protected]
Managing Director Predictive Analytics, S3 Partners, LLC
For more information on S3â€™s reporting, data and analytics solutions, email us at [email protected]. Start your free trial of the BLACK App â€“ the only source of real-time short interest on the Bloomberg Terminal or Thomson Reuters Eikon.
For short side data and access to our research reports go to https://shortsight.com/ .
The information herein (some of which has been obtained from third party sources without verification) is believed by S3 Partners, LLC (â€śS3 Partnersâ€ť) to be reliable and accurate.Â Neither S3 Partners nor any of its affiliates makes any representation as to the accuracy or completeness of the information herein or accepts liability arising from its use.Â Prior to making any decisions based on the information herein, you should determine, without reliance upon S3 Partners, the economic risks and merits, as well as the legal, tax, accounting and investment consequences, of such decisions.