Shorting LinkedIn: A High Stakes Game of Chicken
Senior Editor, CNBC
For the first time, shares of LinkedIn became available to short sellers today Tuesday, but market-watchers say there was a wide gulf between what sellers were asking and what buyers were willing to pay. A high stakes game of "chicken" ensued with little or no business being transacted.
"The shorts were not biting today," said John Tabacco, founder of Locatestock.com. "Clients were bidding about $0.10 a share per day or, about a negative rebate rate of 40 percent, while offers were sitting north of $0.40 a day or, about a negative rebate rate of 99 percent.
However, "Tomorrow morning there will be a lot more willing lenders out there", he said.
Bill Lefkowitz of vFinance Investments told a similar story: "It is still very difficult to locate any stock to short, and if it can be found, it is very expensive."
Lefkowitz said he is waiting for options to list later this week, possibly Friday.
However, one firm confirmed there was business transacted. Gregory DePetris, co-founder of Quadriserv, said that tens of thousands of shares traded on Quadriserv’s AQS securities lending platform at a rebate rate of about negative 99 percent, with bids remaining at those levels at the end of the day. When the stock loan market closed, supply was offered at above negative 100 percent.
"More generally, the volatility of LinkedIn stock over the last few days reflects short-term trading strategies,” DePetris said.
At current prices , that is an expensive bet on the downside. Get after-hours quotes for LinkedIn here.