Illustration: Aïda Amer/Axios

Uber's underwriters, led by Morgan Stanley, were so worried about the company's IPO that they deployed "a nuclear option" ahead of the deal last week to provide extra support for the stock — a so-called naked short, as CNBC's Leslie Picker reported Tuesday.

The catch: Now, actual short sellers are coming in at significant levels and could push the stock even further below its $45 IPO price.

What it means: Every IPO includes an excess amount of shares that allow underwriters to sell 115% of the available offering and then buy the additional 15% back, Picker explains. That extra 15% can support the stock's price if it falters.

  • But in Uber's case, they opened a naked short, allowing underwriters to sell more than the "greenshoe" portion and then buy the shares back, providing "even more firepower."

The bottom line: That plan came up short as Uber's stock fell 18% in its first days as a public company before recovering Tuesday with a 7.7% gain.

What to watch: Actual short bets against Uber now total $768 million, with short sellers holding 11.5% of available shares, according to data from Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners.

  • "We expect Uber short interest to increase over the next several days as short sellers continue to be active," Dusaniwsky said in a statement.

Go deeper: Uber's massive IPO sinks investors

Go deeper

Judge orders Eric Trump to testify in New York probe before election

Photo: Ira L. Black/Corbis via Getty Images

A judge on Wednesday ordered Eric Trump to comply with a subpoena to testify in a New York probe into his family business before the presidential election.

The state of play: New York Attorney General Letitia James (D) last month said her office had filed a lawsuit to compel the Trump Organization to comply with subpoenas related to an investigation into whether President Trump and his company improperly inflated the value of its assets on financial statements.

43 mins ago - Podcasts

Reid Hoffman and Mark Pincus on the rise of Silicon Valley SPACs

Silicon Valley venture capitalists are no longer content with investing in startups and then eventually handing them off. Instead, many are now forming SPACs, or blank-check acquisition companies, to ride tech unicorns into the public markets themselves.

Axios Re:Cap digs into this trend with the co-founders of a new tech SPAC called Reinvent Technology Partners: Reid Hoffman, a co-founder of LinkedIn and partner at Greylock, and Mark Pincus, the founder and former CEO of Zynga.

Updated 57 mins ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 2:30 p.m. ET: 31,717,955 — Total deaths: 973,014 Total recoveries: 21,795,005Map.
  2. U.S.: Total confirmed cases as of 2:30 p.m. ET: 6,913,046 — Total deaths: 201,319 — Total recoveries: 2,646,959 — Total tests: 96,612,436Map.
  3. Health: CDC director says over 90% of Americans have not yet been exposed to coronavirus — Supply shortages continue to plague testing.
  4. Politics: Fauci clashes with Rand Paul at COVID hearing: "You're not listening" — FDA chief vows agency will not accept political pressure on coronavirus vaccine.
  5. Vaccines: Johnson & Johnson begins large phase 3 trial — The FDA plans to toughen standards.
  6. Sports: Less travel is causing the NBA to see better basketball.

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