Lyft shorters pick up earnings
28 August 2019 New York
Image: Shutterstock
Many shorters of Lyft, a ride-sharing app that went public in March, have banked significant profits in recent weeks, following the announcement that a pre-IPO share lockup would expire a month early, according to US data provider S3 Partners.
In a research note on the recent market movements, Ihor Dusaniwsky, managing director predictive analytics for S3 Partners, explained that, on 7 August, Lyft surprised the market by announcing that its pre-IPO lockup for 258 million shares would expire on 19 August, instead of a month later.
鈥淭he market braced for a wave of long selling that would negatively affect Lyft鈥檚 stock price. In actuality, the effect was minimal, with Lyft鈥檚 stock price only falling by 2.40 percent, although the stock is down 12.76 percent since the 7 August announcement date,鈥� explained Dusaniwsky.
In the weeks that followed the revised expiry dated announcement, Lyft shares shorted has decreased by 37.42 percent, representing 8.94 million shares and has further fallen by 43.97 percent (11.73 million shares) since the actual lockup expired.
Of this, Dusaniwsky said: 鈥淓ven though there were expectations of price weakness after the announcement, short sellers were covering their open positions in size both ahead and after the lockup expiry.鈥�
Overall, shorts are up 26.48 percent ($311.5 million) in year-to-date, mark-to-market profits with almost 60 percent of those profits ($182.7 million), occurring after the lockup expiry announcement.
Recent short interest for Lyft stands at $765 million, with 14.95 million shares being shorted, representing 7.66 percent of its float and a 0.30 percent stock borrow fee.
Dusaniwsky said that, even with the buying pressure of over 11 million shares of short covering occurring over the past week, Lyft鈥檚 stock price continued to slide under the onslaught of massive long selling.
He noted: 鈥淚t looks that short covering has now leveled off, and if long selling continues to hit the tape, we should see continued Lyft price weakness as there will be no short-side based offsetting buying pressure on the stock.鈥�
Dusaniwsky concluded: 鈥淲ith just over 60 million in total trading volume since the lockup expiry and nearly 258 million of liberated shares on the street there may be sizable insider holders still waiting to offload their still profitable positions. If they are not proficient in their trading activity, we may see this confluent selling pressure push down Lyft鈥檚 share price past its year-to-date lows.鈥�
Lyft is currently the third most shorted stock in the domestic trucking sector and has had the largest drop in short interest over the last month in the sector, according to S3.
Rival ride-sharing app, Uber, is the current shorter鈥檚 favourite with short interest worth $1.3 billion, as of 27 August.
In a research note on the recent market movements, Ihor Dusaniwsky, managing director predictive analytics for S3 Partners, explained that, on 7 August, Lyft surprised the market by announcing that its pre-IPO lockup for 258 million shares would expire on 19 August, instead of a month later.
鈥淭he market braced for a wave of long selling that would negatively affect Lyft鈥檚 stock price. In actuality, the effect was minimal, with Lyft鈥檚 stock price only falling by 2.40 percent, although the stock is down 12.76 percent since the 7 August announcement date,鈥� explained Dusaniwsky.
In the weeks that followed the revised expiry dated announcement, Lyft shares shorted has decreased by 37.42 percent, representing 8.94 million shares and has further fallen by 43.97 percent (11.73 million shares) since the actual lockup expired.
Of this, Dusaniwsky said: 鈥淓ven though there were expectations of price weakness after the announcement, short sellers were covering their open positions in size both ahead and after the lockup expiry.鈥�
Overall, shorts are up 26.48 percent ($311.5 million) in year-to-date, mark-to-market profits with almost 60 percent of those profits ($182.7 million), occurring after the lockup expiry announcement.
Recent short interest for Lyft stands at $765 million, with 14.95 million shares being shorted, representing 7.66 percent of its float and a 0.30 percent stock borrow fee.
Dusaniwsky said that, even with the buying pressure of over 11 million shares of short covering occurring over the past week, Lyft鈥檚 stock price continued to slide under the onslaught of massive long selling.
He noted: 鈥淚t looks that short covering has now leveled off, and if long selling continues to hit the tape, we should see continued Lyft price weakness as there will be no short-side based offsetting buying pressure on the stock.鈥�
Dusaniwsky concluded: 鈥淲ith just over 60 million in total trading volume since the lockup expiry and nearly 258 million of liberated shares on the street there may be sizable insider holders still waiting to offload their still profitable positions. If they are not proficient in their trading activity, we may see this confluent selling pressure push down Lyft鈥檚 share price past its year-to-date lows.鈥�
Lyft is currently the third most shorted stock in the domestic trucking sector and has had the largest drop in short interest over the last month in the sector, according to S3.
Rival ride-sharing app, Uber, is the current shorter鈥檚 favourite with short interest worth $1.3 billion, as of 27 August.
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