# Uber IPO short sell?



## SirNomad (Nov 5, 2018)

How many of you are actually short selling Uber IPO? I want in, but don't know much about this other than I borrow stock from a brokerage, immediately sell and buy back on the dip and give back the stock and I keep the margin. Is personal credit taken into account, or is this capped by how much you can hold in the broker? This is where it's muddied for me...


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## Tarvus (Oct 3, 2018)

SirNomad said:


> How many of you are actually short selling Uber IPO? I want in, but don't know much about this other than I borrow stock from a brokerage, immediately sell and buy back on the dip and give back the stock and I keep the margin. Is personal credit taken into account, or is this capped by how much you can hold in the broker? This is where it's muddied for me...


There will be a minimum net worth and account balance requirement from your brokerage firm in order to open a margin account which you must have in order to sell short. You will be required to post a margin deposit when you execute the short sale. Back in my days as a stockbroker, that was 50 percent of the market value of the short sale. It may be different now.

The brokerage firm sells the stock for you and it is "marked to market" at the close of each day's trading. If it goes down from the point you sold at, you have a credit which you can withdraw if you wish, or use as initial margin on additional short sales of shares. If it goes up, you have a loss. At some threshold point, if the loss gets big enough, you will be required to post additional funds to the account to bring the balance up to the initial margin requirement in order to maintain the short position (this is called a "margin call"). You are also charged interest on the percentage difference between the initial margin you posted and the balance of the selling price of the stock from the date of the short sale.

Unlike a long position in stock purchasing, where your potential loss is limited to the value of your purchase and your potential profit is unlimited, a short sale limits your potential profit (the stock can't go below zero value) but presents potentially unlimited losses (there is no cap on how high a stock can go).

Hope that explains the basics.


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## UberLyftFlexWhatever (Nov 23, 2018)

SirNomad said:


> How many of you are actually short selling Uber IPO? I want in, but don't know much about this other than I borrow stock from a brokerage, immediately sell and buy back on the dip and give back the stock and I keep the margin. Is personal credit taken into account, or is this capped by how much you can hold in the broker? This is where it's muddied for me...


Uber's Global, This will be an international investment banker, Credit Suisse Group, Brown Brothers Harriman, Deutsche Bank etc. event. Individual investors will watch from the bleachers


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## Tarvus (Oct 3, 2018)

UberLyftFlexWhatever said:


> Uber's Global, This will be an international investment banker, Credit Suisse Group, Brown Brothers Harriman, Deutsche Bank etc. event. Individual investors do not apply


Nothing to stop a short seller in the open market after the IPO. Obviously, you can't sell short before the stock is offered, but once it begins trading, either on an exchange or NASDAQ, there is no reason why it could not be shorted.


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## UberLyftFlexWhatever (Nov 23, 2018)

Tarvus said:


> Nothing to stop a short seller in the open market after the IPO. Obviously, you can't sell short before the stock is offered, but once it begins trading, either on an exchange or NASDAQ, there is no reason why it could not be shorted.


On the day of the IPO, two main parties that hold inventory of the stock: the underwriters and institutional and retail investors. The SEC prohibits the underwriters from lending shares for short sale for *30 days*. In general, new investors in the IPO are unwilling to lend their shares out to be short sold.


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## 1.5xorbust (Nov 22, 2017)

Unfortunately you might get wiped out on the upside during any euphoria before the stock takes its inevitable nose dive. Timing is everything.


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## ANT 7 (Oct 14, 2018)

Since 99.99% of all IPO's pop (go up) afterwards you had better be prepared for the short squeeze.


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