Snap Inc.’s (SNAP) blowout fourth quarter, in which it handily beat Wall Street expectations and added close to 9 million users, left short sellers out in the cold to the tune of $681 million, although they were soon able to salvage some of that.

The maker of the popular messaging app ended Wednesday’s session up 48%, surpassing its initial public offering price for the first time since July. That resulted in mark-to-market losses of $681 million, according to S3 Partners, the financial analytics firm. The subsequent decline in the Stock, along with the rest of the market Thursday, enabled shorts to make back $139 million of those mark-to-market losses, representing slightly more than a fifth of the losses from the sell-off. According to S3 Partners, leading up to the earnings report, Snap short interest increased by $706 million as shorts bet the quarter would be a dud. S3 Partners noted that last week four of the five most shorted stocks in the sector saw short interest rise with the overall short interest in the application software sector at $17.1 billion, increasing close to $1 billion last week alone. Snap, according to S3 Partners, has short interest at $2.1 billion and is the biggest short in that group. (See also: Snap’s VP of Product Announces Exit Amid Crucial Redesign Rollout.)

Snap Short Interest Was Moving Higher

“Short activity in Snap has been active today, with offsetting shorting and buying to cover in size,” wrote Ihor Dusaniwsky, S3 Partner’s managing director of predictive analytics, in a report Thursday. “Traders were either looking for a continuing rally and covered some of their exposure or a pullback from yesterday’s large gains and shorted more stock. We are still seeing a net bearish sentiment in the stock, and are expecting to see more short selling in the near future.”  

Since Snap’s IPO in March 2017, short interest in the stock has been moving higher. It hit its previous high of $1.99 billion in October of last year as Snap’s shares sunk into the low teens. With the decline in the stock Thursday, Snap’s short interest was pushed over the $2 billion mark, noted S3. (See also: Snap Crosses IPO Price After Adding Nearly 9 Million Users.)

For its fourth quarter, Snap reported revenue of $285.7 million, which was higher than the $252.9 million Wall Street, according to Thomson Reuters, was looking for. The earnings loss of $0.13 a share was narrower than the $0.16 a share loss analysts expected. The social media network operator was able to add 8.9 million new users and posted 187 million daily active users in the last three months of 2017, an 18% jump year-over-year. Wall Street had expected 184.3 million daily active users.

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