Traders betting against Snap made $150 million off its earnings disaster
After pushing bearish wagers to the highest level since the company's March 1 initial public offering, selling a whopping $100 million short over a single week, they cashed in when Snap's share price tumbled 17% over the five days ended May 12, according to data compiled by financial analytics firm S3 Partners. That included a plunge of 21% the day after the report.
It's sweet redemption and a long-awaited profit for Snap short sellers, which had lost $28.4 million on a mark-to-market basis during the period between the IPO and the company's inaugural earnings release.
Snap's earnings report landed with a thud after it reported profit that missed Wall Street expectations, while also saying that user growth was at its slowest pace in years. The resulting share selloff cost Snap co-founder and CEO Evan Spiegel $1 billion of net worth.
It's not all bad news for Snap, however, as research analysts from several of the banks who underwrote the company's IPO came to its defense. That included colead bookrunners Goldman Sachs and Morgan Stanley, who maintained their buy ratings on the stock and left their price targets unchanged.
