- Shares up 2% in early trading
- Company recently debuted on London Stock Exchange
- JP Morgan short position made on June 25
Shares in Raspberry Pi (RPI) were up more than 2% this morning to 410p despite it emerging that the asset management arm of US investment bank JPMorgan (JPM:NYSE) has taken a short position in the affordable computer developer.
Short sellers pay a fee to borrow shares from existing shareholders and sell them with the aim of buying them back at a lower price at some point in the future. The Times reported that disclosures to the Financial Conduct Authority show JP Morgan had amassed a short position equivalent to 0.51% of Raspberry Pi's issued share capital.
Russ Mould, investment director at AJ Bell has highlighted the timing of JP Morgan’s move: ‘What’s odd is the point at which JPMorgan opened its short position. Its short against Raspberry Pi was made on 25 June, which is after the initial pullback happened in the share price. In effect, it is betting against the current up-trend in the stock which implies it might have concerns about the business or its valuation.’
WHY SHORT NOW?
JP Morgan’s reasoning could be something to do with risks highlighted in the company's prospectus.
For example, future supply chain disruption which could push costs up or restrict component availability, factors which could lead to customers having to pay more for its kit.
Raspberry Pi is also heavily reliant on a handful of partners, principally Broadcom (AVGO:NASDAQ) as a component supplier and Sony (SONY:NYSE) as its biggest manufacturer. Any breakdown with these relationships could be damaging.
FLYING START
On 13 June, the company made a stunning debut on the London Stock Exchange with its IPO (initial public offering) priced at 280p, the top end of the range. The shares surged 30% higher to 360p, valuing the company at nearly £700 million.
Having reached 440p in the days after the IPO the shares drifted lower before making steady progress.
The company founded by chief executive Eben Upton in 2012 with the premise of ‘making computing more accessible to young people’.
Raspberry Pi designs and develops low-cost SBCs (single board computers) and computer models for industrial customers, enthusiasts, and educators around the world.
The Cambridge-headquartered company also entered the semiconductor market in early 2021 with the launch of its first semiconductor product, the RP2040 microcontroller.
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (Sabuhi Gard) and the editor (Tom Sieber) own shares in AJ Bell.
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