Snap Post-Earnings Rally Sticks Short Sellers With $166 Million Loss
“It looks like the ones left have some conviction,” says S3 Partners.
(Bloomberg) -- A rally in the shares of Snap Inc. after better-than-expected financial results is adding up to more pain this year for short sellers.
Snap’s surge in extended trading translates into mark-to-market losses of more than $166 million based on short interest of about 24 percent of the free float, according to data from S3 Partners. That’s on top of nearly $200 million in paper losses for short sellers since the start of the year as Snap has rallied, according to Ihor Dusaniwsky, the firm’s managing director of predictive analytics.
“With the amount the stock was going up, I’m surprised there wasn’t more short covering ahead of earnings,” Dusaniwsky said in an interview. “It looks like the ones left have some conviction.”
Snap rose 20 percent in extended trading at 5:50 p.m. in New York. S3’s $166 million estimate was based on the stock’s 17 percent gain before the earnings call began.
While Snap’s first-quarter revenue forecast fell short of estimates at the midpoint, investors cheered the fact that users of its Snapchat photo-messaging app didn’t shrink as many on Wall Street were projecting. Of course, Snap’s long slide from a record high just after its initial public offering in 2017 has generated plenty of profits for short sellers. The stock has tumbled 74 percent from the March 3, 2017 record of $27.09, based on Tuesday’s closing price.
To contact the reporter on this story: Jeran Wittenstein in San Francisco at jwittenstei1@bloomberg.net
To contact the editor responsible for this story: Catherine Larkin at clarkin4@bloomberg.net
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