Cue the bear raid in money-losing hype job Lyft.
“When the Lyft IPO shares begin settling tomorrow (Tuesday) and lending programs see their lendable inventories grow, over the next several days we should see a dramatic increase in stock lending, short sale approvals and Lyft short selling,” cautioned S3 Analytics Managing Director Ihor Dusaniwsky.
A short sale is a bet against a company’s stock price. It turns profitable when the stock loses value.
With Lyft shares from the IPO not settled yet, Dusaniwsky explains, and SEC regulations prohibiting IPO underwriters from lending shares to cover short sales for 30 days, only a tiny fraction of the 34 million shares traded on Monday reflected short sales.
Why the shorts could attack Lyft
It’s all about that momentum and sentiment for IPOs in their early trading days. And suffice it to say, the momentum right now is swinging against Lyft — which could only feed a bear’s appetite to go short the stock.