The simple answer is, greed and fear are the 2 emotions that basically control markets.
On the first day of May the stock was trading at 4.90. It's now trading at 1.56.
When it was trading at 4.90 they did not have the 180 million dollars in the bank as they do now. They also did not have a BTA signed with Meridian. And yet we now resemble a basket case.
At the time, I remember people were complaining about raising this money at 4.35. One might suggest they would not be thinking that way today.
A lot has changed in quick time regarding the share price. The reality is the company is better shape today then what it was at 4.90. Some will argue that point.
But the points I have just mentioned are the facts.
How far will the share price drop will be determined by how far investors, shorters, daytraders, instos and shareholders are prepared to sell them down. If everyone collectively decided not to sell any more shares below 2.50, the share price would stop dropping immediately. The buyers would then be forced to pay substantially more for their shares. Very simplistic I know. But its supply and demand that ultimately decides prices.
Many years ago I went to the market and I was buying bananas for 1.49 per kilo. The next week they had risen to 8.99 per kilo because bananas had been wiped out in QLD because of some cyclone. Perhaps people can remember it. Bananas suddenly became very scarce. You either paid 8.99 or you went without.
Supply and demand.
Common sense often gets put to one side when a stock is being belted down for fear that it will go down further. That's why we see investors selling today when they had chosen not to sell them at 4 dollars plus a few months back.
The market is a strange beast at times.
As Warren Buffet pointed out when he saw the U.S market correcting.
He said, it presents a wonderful opportunity to buy good stories so much cheaper.
Clever man is our Mr Buffet.
One question before I leave you. If LNG would have offered stock at 1.50 three months ago to shareholders, who would have taken them.
LNG Price at posting:
$1.58 Sentiment: Buy Disclosure: Held
