Market Overview

You Don't Have To Wait Very Long To Short Snap

You Don't Have To Wait Very Long To Short Snap

Snap Inc (NYSE: SNAP) couldn’t even make it through its first day of trading before receiving its first Sell rating on Wall Street. After Pivotal Research Group initiated coverage of Snap at Sell on Thursday, Instinet followed up with a Sell rating of its own.

Big tech IPOs have a poor track record when it comes to their first year of trading. In fact, eight out of the 10 largest tech IPOs in history declined between 15 and 71 percent in their first year on the public market.

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Related Link: Will Snap Be The Comeback Of The Tech IPO?

The Snap short trade is a popular idea among retail investors, but shortable shares will initially be hard to come by. Retail investors who were unable to short shares of Snap on Thursday may have better luck on Friday. According to a representative from E*Trade, the firm expects to have Snap shares available to short immediately after the market open on Friday. The representative told Benzinga customers must be enrolled in the firm’s Hard to Borrow program due to Snap being listed as a hard to borrow security.

IPO underwriters are forbidden by rule from lending out shares of the IPO stock within the first 30 days of trading. That means that firms such as Goldman Sachs, Morgan Stanley, Bank of America, JPMorgan Chase, Deutsche Bank, Barclays and Credit Suisse will not be able to lend their shares for the time being.

Fortunately for potential short sellers, they didn’t appear to have missed an opportunity on Thursday. Snap shares are up another 4.9 percent in Friday’s pre-market session.

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