GoPro Inc (NASDAQ:GPRO) is one of the few companies with overwhelming success after their initial public offering. The company’s IPO went down in June and the stock has since more than tripled in price, coming from an IPO price of $24 to well above $90.
This development has made the stock a darling of many investors, and particularly the short sellers who bet on a possible slump of the stock.
Unfortunately for the short sellers, the news hasn’t been good. They are pretty much feeling the effect of the company’s rallied market strength. It’s really been a pricey affair betting against a stock that has been posting a steady rise. The climb up has seen many borrowers pay highly as the stock steadily rises beyond their expectations.
“GoPro is currently one of the most expensive stocks to borrow among all U.S. equities,” said Andrew Laird, analyst at securities-financing tracker Markit.
The biggest challenge that the borrowers have faced isn’t because the stock has gone high, but more because of its consistent rise and stability. The stock has registered only two notable drops since its IPO, with the first one coming in at 14% on June 2 and the second one coming at 15% in August.
Currently, all the shares of GoPro Inc (NASDAQ:GPRO) that have been availed for lending have all be borrowed even as much as the borrowing amount is extremely high.
Laird further said that investors are also willing to pay around 100% per year in order to borrow shares of GoPro Inc (NASDAQ:GPRO). This makes the stock one of the best performing in the market. And the fact that the supply for the lendable shares is lower than the demand is good news for Nicholas Woodman and other investors.
Short sellers borrow shares to sell for a short period, expecting to buy them back when the price of the stock goes down.
Many market analysts however think that the stock may remain stable as it approaches the launch of its small high activity camera, the HERO 4. With GoPro Inc (NASDAQ:GPRO) planning to launch new cameras before the holiday shopping season, it’s likely that the products will have amazing performance in the market.
Stability in the stock or any other upward movement means more losses for short sellers. Still, the market is quite dynamic and anything can happen.
This article has been written by Victor Ochieng.