Short sellers 'clamoring' to borrow Roku shares: S3 Partners

Published : October 03, 2017 Updated : October 03, 2017
By Noel Randewich

By Noel Randewich

 

SAN FRANCISCO (Reuters) - Traders on Tuesday were "clamoring" to borrow shares of Roku <ROKU.O> in order to sell them short following the video-streaming company's initial public offer last week, according to S3 Partners.

 

Shares of the Los Gatos, California company dropped 10.5 percent to $21.08 on Tuesday, bringing their decline to 20 percent in the past two sessions.

 

"With short sellers clamoring for short locates, stock borrow rates have increased from the 20-percent fee level to over 65-percent fee for some trades we've seen done today," Ihor Dusaniwsky, S3 Partners’ head of research, said in an email.

 

So far, about 2 million shares of Roku have been sold short, according to the financial analytics firm.

Riding a wave of consumers abandoning cable TV and switching to online content while facing competition from larger rivals, Roku remained up 51 percent from the $14 price set in its initial public offer on Wednesday.

Based on its 2016 growth rate, Roku’s annual revenue could reach $623 million in 2018, putting its current stock price at about 3.2 times revenue, a level that appears expensive compared to other Silicon Valley consumer electronics makers.

Roku's shareholders include Menlo Ventures, Fidelity and Rupert Murdoch’s Twenty-First Century Fox <FOXA.O>.

(Reporting by Noel Randewich; Editing by James Dalgleish)

 
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