With more than 60% of borrowing fees, the soaring of famous plant-based meat manufacturer, Beyond Met, slows down as the borrowing fee prevents short sellers from adding the company’s stock.
Following the initial trading of the company, shares soared as short sellers were too quick to bet against the shares, but short activity has slowed down more recently, partly because Beyond Meat’s stocks are now too expensive to borrow.
Beyond Meat shares BYND, +13.37%, now carry a stock-borrow rate of about 68%, according to data from S3 Partners, a financial technology and analytics firm, making it so would-be short sellers would have trouble achieving a reasonable return on their investments after taking into account the borrowing cost.
With a borrowing rate of 68%, Beyond Meat is the most expensive stock to short of all U.S. stocks with over $100 million in short interest, Ihor Dusaniwsky, managing director at S3, told MarketWatch.
“With much of its stock held by internal holders or in non-lending retail hands, coupled with a relatively small float, there is little hope of a significant amount of stock landing in lending programs until its 180-day lockups expire on Oct. 29,” Dusaniwsky said.
14th-largest short interest in the food-products sector, recently crossing the $500-million threshold, but its “quick rise up the league tables” has been slowed down by the high borrowing costs, Dusaniwsky added.
Shorts have seen mark-to-market losses of 20% on their short bets since the IPO. Beyond Meat’s stock is currently up nearly 300% from its IPO price of $25.
“If Beyond Meat’s stock price moves to the upper end of the range, we would expect a short squeeze in the stock as the increased mark-to-market losses coupled with high stock borrow rates would be a one-two punch most short sellers would find hard to stomach,” Dusaniwsky wrote.