Spot levels for new borrow to short SolarCity (SCTY US) stock have come in significantly over the past month of trading, after Tesla Motors (TSLA US) entered into a revised merger agreement for the purchase of all outstanding shares of the solar power energy service. The latest rates trading in the securities lending market to a secure borrow are currently in the high 30% fee range, compared to quotes as high as 175% fee as recently as mid-July.
According to the S3 Crowding Indicator, a measure of the magnitude of real-time shorting activity relative to market cap and float, we have witnessed a cluster of 5 instances of short sale covering over the past 6 days of trading. Furthermore, according to the S3 Velocity Indicator, a measure of the real-time relative change in shorting activity, short sellers looking to buy-back their positions have accelerated their buy-to-covers since Aug 1st, unwinding their bearish bets with the 7Day Velocity trend-line descending at a quicker pace.
With this recent activity, we are estimating SolarCity short interest at $483million, nearing year-to-date lows, and down almost 43% from its year-to-date high seen back in January.
For more information on the above analysis, please contact:
Matthew Unterman, Director, S3 Partners, LLC Matthew.Unterman@s3partners.net
The information herein (some of which has been obtained from third party sources without verification) is believed by S3 Partners, LLC ('S3 Partners') to be reliable and accurate. Neither S3 Partners nor any of its affiliates makes any representation as to the accuracy or completeness of the information herein or accepts liability arising from its use. Prior to making any decisions based on the information herein, you should determine, without reliance upon S3 Partners, the economic risks and merits, as well as the legal, tax, accounting and investment consequences, of such decision.