Think This Lyft Sell-off Is Bad? Wait ’Til Short Sellers Enter Fray
Lyft shares gave way to selling on Monday after last week’s surge.
(Bloomberg) -- A rocky start for Lyft Inc. shares could get worse as the stock becomes available to short sellers amid rising skepticism on Wall Street.
Bears are expected to ramp up selling of borrowed shares as soon as Tuesday once trades from Friday’s debut settle, according to Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners. While Lyft fell 12 percent Monday, Dusaniwsky blamed the drop on shareholders exiting the stock, rather than short sellers, because IPO shares aren’t finalized yet and therefore not in lending programs.
"It’s going to be interesting because you’ll have long holders that are already on the fence," he said in an interview. "If the shorts come in, they are going to push the longs out."
Short interest should steadily increase as more and more shares become available. And early indicators are pointing to strong demand from short sellers, said Dusaniwsky. Lyft shares gave way to selling on Monday after last week’s surge, closing more than $2 below its initial offering price.
"There’s going to be a ton of demand and not a lot of supply," said Dusaniwsky, who expects the imbalance to result in borrow fees exceeding 10 percent, a level he called "very expensive."
To contact the reporter on this story: Jeran Wittenstein in San Francisco at jwittenstei1@bloomberg.net
To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Lu Wang
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