NEW YORK: Lyft Inc shares had seen strong demand among short sellers on Tuesday even as borrowing fees surpassed that of other U.S. equities as investors rushed to bet against the loss-making ride hailing service, which has warned it may never be profitable.
After rising as much as 23per cent in its Friday market debut, the stock pared gains sharply to finish the day up just 8.7 percent. Lyft faces criticism for its dual-class share structure and its strategy for autonomous driving. Investor worries also include new laws aimed at increasing driver pay. Annualized borrowing fees for Lyft shares ranged from 85per cent to 150per cent of the amount borrowed but the majority of activity was for just over 100per cent, according to IHS Markit, which said this makes Lyft the most expensive stock to borrow among companies with more than US$5 million of stock on loan.Facebook shares sold short on the day after its IPO had an annualized fee of 39 percent of the amount borrowed.
Still, short sellers did not appear to be the dominant force on Wednesday as the stock was last up 3.0per cent at US$71.06 bringing it closer to its IPO price of US$72 but well below an intraday high of US$88.60 reached on the first day of trading.