Here’s Why Snap Shares Are Looking Up Again

Mar 08, 2017

Shares of Snap Inc rebounded on Wednesday following a steep selloff while an initial rush to short sell the stock appeared to be slowing.

The owner of the Snapchat messaging app had fallen sharply in the previous two sessions as investors focused on its lofty valuation following a $3.4 billion public listing last week that was the hottest technology offering in three years.

Shares of Snap, which has warned it may never be profitable, rose 3.6% to $22.21.

Traders betting against Snap on Wednesday added less than $50 million in new short sales of its stock, a slower pace than the day before, when initial short bets jumped to $300 million, according to S3 Partners, a financial analytics firm.

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Short sellers borrow and then sell stocks they think will fall in value, hoping to profit by buying the stock back more cheaply later on and then returning it to its owner.

Reflecting a higher supply of Snap's shares and potentially less demand, the interest rates brokers charged to lend the shares declined to around 15% from as much as 40% on Tuesday, said S3 Partners Managing Director of Research Ihor Dusaniwsky.

Snap has been a roller-coaster ride for traders, surging 59% in its first two days of trading, and falling 18% since then.

Billionaire investor David Tepper, whose views on markets and stocks are closely watched by other money managers, told CNBC on Wednesday he bought shares of Snap in the IPO, sold some, and would buy again if the price dropped.

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