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Bets against Uber and Lyft rev up to nearly US$2 billion

Businesswoman using smart phone in crowdsourced taxi at night

Short sellers are revving up their bets against freshly-listed ride hailing giants Uber Technologies Inc. (UBER) and Lyft Inc. (LYFT).

Total short interest against the two companies now totals almost US$2 billion, according to a report from the financial technology and analytics firm S3 Partners.

“Both value and momentum short traders have been active in both of these new IPO’s, but with LYFT borrow supply limited and its high borrow costs eating into expected Alpha, we are seeing UBER shares getting the brunt of the short selling activity,” wrote Ihor Dusaniwsky, managing director at New York-based S3.

The firm found the dollar value of short interest against Uber and Lyft are comparable, $926 million and $1.06 billion, respectively. Those figures have jumped since S3’s previous report on the two companies last week, 9.5 per cent for Uber and 6 per cent for Lyft.

Uber shares are struggling to revisit their $45 IPO price after debuting on the NYSE on May 10, when it stole the title of biggest first-day trading loss in U.S. history. The stock closed at $41.59 on Friday.

Lyft’s NASDAQ-listed shares have also tumbled well below their IPO price of $72, closing at $54.63 on Friday. News of a class action lawsuit claiming the company misled investors in its filings to go public has investors punishing the stock.

S3 found shares shorted as a percentage of Lyft’s total float is almost 53 per cent, and shorted shares make up 12.3 per cent of Uber’s float.

Betting against Lyft is a far more expensive proposition, with a borrow fee of 17.2 per cent, according to S3. The firm said the borrow fee for Uber shares is about one per cent.

Yahoo Finance Canada Morning Brief