Short interest in Facebook shares rises
UPDATED @ 10:02:04 PM 24-05-2012
NEW YORK, May 24 — Demand to borrow Facebook Inc shares for shorting has increased, with nearly 8 percent of the stock out on loan, according to financial data company Data Explorers.
About 70 percent of the shares available for lending are out on loan as demand to borrow, and possibly short the stock, strengthens, Data Explorers said on Thursday.
Some 33 million Facebook shares are out on loan, or 7.9 percent of the free float.
The cost to borrow the online social network's shares has fallen sharply, Data Explorers said.
On the firm's scale of 1 to 10, from least expensive to most expensive, Facebook shares scored a 6 after trades settled on Wednesday, down from 10 the day before. One reason for the decline is that more shares are available for borrowing.
Facebook shares were higher in premarket trading on Thursday, up 57 cents to $32.57.
Shorts borrow shares and sell them, betting the price will fall so they can buy back the shares at a lower price and pocket the difference. There are also other reasons to borrow stocks; prime brokers do so for market-making purposes. — Reuters