SAN FRANCISCO/NEW YORK (Reuters) - Shares of Snap Inc SNAP.N rallied on Wednesday as options traders buckled in for the social media company's quarterly results and after an analyst said the beaten-down stock was "getting interesting."

FILE PHOTO - A woman stands in front of the logo of Snap Inc. on the floor of the New York Stock Exchange (NYSE) while waiting for Snap Inc. to post their IPO, in New York City, New York, U.S. on March 2, 2017. REUTERS/Lucas Jackson/File Photo

Shares of Snap, owner of the popular messaging app Snapchat, have been punished by investor concerns about user growth and waning confidence in the company’s ability to ever turn a profit. The shares are down 50 percent from the record high reached shortly after Snap’s market debut in early March.

Shares of Snap closed up 4.15 percent at $13.56 on Wednesday, still well below the $17 price in the initial public offering, the third-largest IPO for a U.S. technology company. The company is set to report quarterly results after the market close on Thursday.

Recent options transactions imply traders expect a 15 percent one-day swing for the stock in either direction following the quarterly results.

Opening the door to more volatility, Snap employees on Monday will be permitted to sell shares for the first time since the IPO, in the second expiration of restrictions on sales by certain shareholders. Restrictions on stock sales by early investors in Snap expired on July 29.

Snap has been a favorite of short sellers - who bet that a stock will fall - and the expiration of the lockup last month increased the number of shares available for trade.

Traders are now paying an annualized interest rate of 3.5 percent to borrow Snap shares in order to short them far less than rates over 70 percent ahead of that lockup expiry, according to S3 Partners, a financial analytics firm. Short bets have increased to 70 million shares from 67 million at the end of July.

Snap’s chief executive, Evan Spiegel, and co-founder Robert Murphy each own 211 million shares and are the company’s two largest shareholders. Some investors believe that on an analyst conference call following the quarterly report, Spiegel may reassure investors that he has no immediate plans to sell.

“People would be encouraged by that, inside and outside the company,” CFRA analyst Scott Kessler said in a recent interview.

On May 11, shares plunged 21 percent after Snap, in its first quarterly report as a public company, released results that missed some Wall Street estimates.

FBN Securities analyst Shebly Seyrafi on Wednesday cut his price target for Snap's stock to $17 from $21, and wrote that at current levels Snap is "getting interesting" and could become an acquisition target for Facebook Inc FB.O.

For the quarter ending in June, analysts on average expect $187 million in revenue and an adjusted loss of 14 cents per share, according to Thomson Reuters data. On a GAAP basis, Snap is expected to post a loss of $359 million.