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Sharks Circle Facebook (FB) As Shares Now Free to Short

May 23, 2012 9:29 AM EDT
Just when retail investors stuck in the Facebook (NYSE: FB) IPO thought it couldn't get any worse... it did.

Today, sources indicated that shares of the botched IPO are now freely available to short at a borrowing cost of around 7%. While shares were available to short yesterday they were hard to borrow and had a rate of around 50%.

When traders short a stock they borrow the stock, sell it at the current level, and hope to buy it back later at a lower price, pocketing the difference.

Shares of Facebook are higher in pre-open trading following a positive rating at Needham & Company, which set a Buy rating and $40 price target. Shares last traded at $31.63, up 2%.


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