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$1 billion in the market to short the first unit of the Lyft network or the gods are difficult to save
Financial sector website
A recent report released by the financial sector US stock market shows that traders have raised nearly $1 billion to short the newly listed online car star company Lyft, and also have a large number of "dry powder" (liquid powder) High assets, such as cash, are needed in case of need.
Since the initial public offering on March 28, Lyft's IPO has gone through a difficult period, and the company's share price has fallen more than 17% from the opening price of $87.24.
At 12:10 EST, Lyft shares rose more than 4% in intraday trading to $72.5.
According to Ihor Dusaniwsky, managing director of predictive analysis at financial analyst firm S3 Partners, with the short selling of 13 million shares (about 41% of total trading volume), it is intentionally short. The stock of the stock has soared to 937 million US dollars.
Lyft recorded a loss of more than $900 million last year, but its valuation still reached $23 billion, but this did not prevent it from becoming a short-seller. The sell-off has pushed Lyft's share price close to its share of 72. The IPO issue price of the US dollar.
Shortly after listing, Lyft's stock became the most expensive stock on the market, with annual short-selling fees exceeding 100%. Since then, as more stocks have been lent to short positions, borrowing rates have fallen from early in the morning to 10-20%. In order to short the stock, the short seller is forced to "borrow" the stock to the actual holder. If there is no “borrowing” of stocks, it will not be able to limit the number of short-selling stocks. This is a highly controversial practice and is known in the industry as “Naked Short Selling”.
Specifically, “naked short selling” refers to an investment method in which an investor does not borrow stocks and directly sells stocks that do not exist in the market, and then buys back stocks to obtain profits when the stock price falls further. A trader who performs a “naked short sale” will be successful if he buys the stock before the delivery date. Since “naked short selling” sells non-existent stocks, the volume may be very large, which will have a sharp impact on the stock price. Lehman Brothers was one of the victims of “naked short selling”.
According to data compiled by Bloomberg, more than 60% of the 30 million shares listed on Lyft are currently in a state of “debitable loans”. Therefore, Dushanniski pointed out that when the interest rate of borrowing began to decline, the short sellers will have enough "dry gunpowder" to measure the size of their positions.
For many IPO cases, short selling is generally active in the first few weeks of the company's listing. Among them, Facebook, Snap and BlueApron are typical examples. These companies have been short-lived in the first three months after their IPO.
At the time, Facebook's listing was seen as one of the largest IPO transactions in history, but then Wall Street banks relied on short-selling the stock to make a profit of $100 million. Even Goldman Sachs and JP Morgan Chase, the underwriters of Facebook IPO, are among the participants who lend out Facebook stock to meet the needs of hedge fund short-selling.
That year, it was these Wall Street banks that were commissioned to sell a total of $16 billion in Facebook stock, and the fee income they received was as high as $176 million.
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