Twitter (NYSE:TWTR) has an abundance of shares accessible to traders, making the cost to borrow Twitter stock considerably lower. For those traders that hope to ride the falling share price, this is good news. This is referred to as short selling, where shares are sold at a high price with a prediction that the price will soon drop. Then, later, the seller can buy back the shares at a considerably lower price and profit.
At it’s height, stock borrowers on Twitter were looking at 20 percent annualized rate, but now the rate lies more in the 5 percent area, according to Reuters. Nine million shares were on loan as of Wednesday. “Today’s numbers are showing a cooling off. This interest would appear to get smaller minute by minute,” according to Timothy Smith, executive vice president at Astec Analytics. Smith noted that 37 percent of the available supply of shares was eaten up by the end of Wednesday.
Research analysts on Wall Street largely advocate holding or buying shares, as opposed to selling — with about eleven to two analysts recommending the former over the latter. Twitter has been all over the news lately with it’s new “custom timelines” allowing companies to monitor and skim the best tweets popping up during big events.
On top of that, there’s also been JPMorgan Chase’s (NYSE:JPM) painful popularity on the social media site, with users tweeting rather scathing questions with the hashtag #AskJPM — disrupting the banks plan to allow college students to question a senior executive on the company.
Some of the more creative tweets included “Do all employees get noise-canceling headphones to mute the sounds of poverty your foreclosures cause, or do only execs get those? #askJPM,” from @alexisgoldstein, and “#AskJPM What type of gun did Jamie Dimon hold to Jon Corzine’s head when demanding the xfer of the MFGlobal funds? A Beretta? A Colt 45?” from @banksterslayer — according to ABC News.