By Saqib Iqbal Ahmed
NEW YORK, June 23 (Reuters) – Short sellers are finding it easier to borrow SpaceX shares, even as some 5% to 7% of the company’s float, about 40 million shares, has been sold short, according to S3 Partners.
“Shares are getting easier to borrow,” said Sam Pierson, director of research at S3 Partners, noting that short sellers were paying about 60 basis points to borrow the shares.
While higher than the roughly 30 basis points for stocks with the lowest borrow costs, the rate reflects increased supply and a lack of concern regarding borrow availability for funds considering shorting, Pierson said.
Short sellers aim to sell borrowed shares and buy them back at a lower price for a profit. When share supply is constrained, as can be the case for newly listed stocks with limited floats, it can push up borrow rates, making it more expensive for investors to sell shares short.
The lofty valuation for Elon Musk’s rockets-and-AI firm is likely to draw short sellers looking to bet on a drop in the share price. Factors that could deter SpaceX bears include strong retail and institutional interest in the stock and Musk’s history of waging highly public battles against short sellers.
On Tuesday, SpaceX shares were up about 6% at $164.04. During the session they slipped as low as 147.11.
(Reporting by Saqib Iqbal Ahmed; Editing by David Gregorio)
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