By Tim Fox, Head of Demand Generation
IPOs are special in many ways, often bringing heightened market activity that can create unique opportunities for investors. One such opportunity lies in securities lending, where demand for newly listed shares can lead to elevated borrowing demand.
Case study: CoreWeave Inc. (CRWV)
CRWV recently completed its IPO at $40 per share. Over the following weeks, the stock experienced notable price movements, including a significant rally in mid-May following announcement of a $4B strategic partnership with OpenAI and Nvidia revealing a $900M investment in the company.
+22% in a day.
+250% since IPO.
But that is only one side of the story.
While some investors benefited from the stock’s appreciation, others also participated in securities lending programs, earning additional income by lending out their CRWV shares. During this period, lending rates varied significantly – hovering around 5–10% for weeks and then spiking past 200% by June.
Illustrative example
To help demonstrate the potential impact of securities lending, consider the following scenario:
Illustrative purposes only. Past performance is not indicative of future outcomes. Actual results may vary.
Why consider securities lending?
If you’re a long-term investor in a company, why not let that conviction earn you more? Participating in a securities lending program can offer a way to generate extra income from your existing portfolio – just make sure you understand any associated risks and ensure the strategy aligns with your investment goals and risk tolerance.
Learn more
Whether short sellers are proven right or wrong, their activity creates market dynamics that may offer additional earning opportunities. Curious how it all fits together? Read our article: “Get Shorty: Is the bum rap short sellers get justified?”
For institutional investor use only. This material is provided for informational purposes only and should not be construed as an offer or solicitation to buy or sell securities or to enter into any securities lending transaction. Any lending rates shown herein are indicative of selected securities during the specified time period and are subject to change. Not all securities are available or eligible for lending. Availability of securities lending programs may vary by jurisdiction and regulatory requirements. All investments carry inherent risks, including the potential loss of capital. Securities lending may not be suitable for all investors and may have tax implications; investors should consult their financial and tax advisors before participating.
