Mark Zuckerberg's hearing has Facebook traders bracing for the worst as hedges surge

Advertisement
Mark Zuckerberg's hearing has Facebook traders bracing for the worst as hedges surge

nyse facebook

Reuters / Keith Bedford

Advertisement
  • Mark Zuckerberg will face a Congressional hearing on Tuesday to address Facebook's involvement with a political-research company that accessed 50 million user profiles illegitimately.
  • Based on how stock traders are positioned, they're expecting Facebook's recent share price woes to continue.
  • Follow Facebook's stock here.

Facebook's stock has taken a serious beating in the weeks leading up to chief executive officer Mark Zuckerberg's appearance in front of Congress on Tuesday. And based on how traders are positioning ahead of the testimony, they think the selling can get even worse.

Short interest - or a measure of bets that a stock will decline - has spiked to 0.43% of shares outstanding for loan, the highest since September 2015, according to data compiled by IHS Markit. The gauge has more than doubled from its levels in mid-March.

Screen Shot 2018 04 10 at 8.53.04 AM

Business Insider / Joe Ciolli, data from IHS Markit

The sudden surge in short interest shows just how concerned investors have gotten in just a short amount of time. After all, many investors hold short positions as hedges, with hopes of protecting the money they've already made in a stock.

Advertisement

If these traders are able to cash in, that would mean Facebook's shares added to their already-drastic 16% decline since the start of February. The firm's issues have snowballed in earnest since an initial report that political-research company Cambridge Analytica accessed 50 million Facebook user profiles illegitimately.

Those investors not trading Facebook's stock will also be watching with great interest to see how Zuckerberg's testimony impacts shares. Back in February, the company's woes were at least partially responsible for deep losses across the tech sector, highlighting its influence on the broader market.

With heavy weightings in multiple major US indexes and exchange-traded funds, Facebook is a market-moving force to be reckoning with. But this time investors know turbulence could be coming, and are more prepared for it.

{{}}