- Uber short-sellers recorded $US270 million in mark-to-market profits in two days, according to data from IHS Markit.
- The returns were driven by Uber falling to record lows after it reported disappointing third-quarter earnings and its post-IPO lockup expired.
- Uber shorts have been slowly adding to their positions since August, according to Sam Pierson, IHS Markit’s director of finance securities.
- Watch Uber trade live on Markets Insider.
Uber short-sellers are seeing solid returns as the stock falls to record lows.
Traders who have bet against the ride-hailing giant recorded $US270 million in mark-to-market profits in two days, which is about 43% of their year-to-date returns of $US640 million, according to data from IHS Markit.
Here’s the breakdown. On Tuesday, short-sellers netted $US200 million when Uber shares fell 9.85% to a record low after the company reported disappointing earnings results. On Wednesday, short-sellers logged an additional $US70 million in early trading when Uber’s post-initial public offering lockup period expired, sending shares down as much as 8.7%.
Uber has struggled to win over investors since its May IPO, largely due to the company’s massive quarterly losses and forecast that it won’t turn a profit until full-year 2021. On Wednesday, the company’s market valuation at the stock price’s intraday low was $US43.6 billion, its lowest since 2015, when the company was privately held.
The falling stock price has benefited short-sellers, who make a profit when share prices decline. There are currently about 74 million Uber shares on loan, which means a $US2 billion short position against the company, according to Sam Pierson, Markit’s director of securities finance.
To realise the gains Uber short-sellers have seen, they would have to cover their trades, or buy back the shares they borrowed to short. So far, there hasn’t been much evidence that short-sellers are exiting the trade, according to Pierson.
In fact, he’s seen the opposite. “There’s just been a kind of slow steady increase in the shares on loan, the short interest, up to this point,” Pierson told Markets Insider in an interview.
Uber is down roughly 42% year-to-date.
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