NIO Inc (NIO US) short interest is 41.3 million shares short, 5.37% of shares outstanding and $317.98 million at risk wagering on a stock price decline.
Referred to as the “Tesla of China”, the Shanghai-based company manufactures and sells autos, offering electric vehicles, parts, and battery charging services.
Demand by bearish speculators to secure borrow to short sell the ADRs had been revving higher since its September IPO.
Bi-weekly SI measured in shares and dollar exposure over first full month of trading:
Over the next 45 days, short interest increased by only another 6.2 million shares (to 38.3 million) more likely due to decrementing borrow availability opposed to waning demand.
Then on Friday, China announced it would roll back the additional 25% tariff on US imported cars, a negative headline for the domestic NIO.
This news sparked a portion of the long holder base to unwind, causing a wave of recall activity in the sec lending space, which resulted in rates touching as high as 50% fee range.
Although spot rates have come in to 20% fee range today, the average cost of carry for a fund to finance an existing short position continues to trend higher, which may ultimately force covering activity pulling short interest back from its recent high.
Despite this recent volatility, we anticipate short seller demand to remain elevated at least until the upcoming IPO Lockup Expiry in early March.
Want deeper insight into the above analysis?
Contact: Matthew.Unterman@s3partners.net
Director – Securities Finance, S3 Partners, LLC
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