You’ll care if you have a stop or a margin level, and they tactically and temporarily manoeuvre the price to flush out these levels and the corresponding sell volume, so they can cover for profit.
It’s a financial game at that level, nothing to do with the company or its performance, and leverages the uncertainty and risk inherent to a growing and developing company.
Sure, long term, the “market” should settle at a reasonable level that aligns with the activities and earnings of the business, but in the meantime, in the short term, all hell can break loose and screw over genuine investors who either cannot hold through the short attacks, or get persuaded that “something must be wrong with the company” just because the sp weakens.
You can also bet, imo, they apply such tactics upon market releases, to herd the sheep to interpret the announcements in a particular light.
It’s preying on financial vulnerability and psychology and peoples’ lack of research/knowledge. That’s the game they play, and with a lot of capital, you can bully your way along. Ever played poker against someone with a huge chip stack? They can generally bully their way through and run you down, very easily.
Some may view a stop loss as guaranteed cover volume for shorts if they can push the price to whatever level those stops are at. If they can short say $1.2M worth of stock down to say $1, knowing that will free up $1M I’m triggered stops at that level then they can be pretty confident they can do that and cover for $1M and pocket the $200k. Sure they must consider the other market participants, but I don’t believe for a second that they have no idea of the stop volumes and levels. Chinese walls haha yeah nah.
“True value” depends on interpretation/knowledge/expectations etc, hence we have a market, even if you exclude the silly-bugger trading tactics.
If a lot of participants behave (buy/sell) based on a particular interpretation, then the price can become rather disjointed from what it “should” be, and may be due to a “genuine” belief, assessment or even misunderstanding, or “purposeful” manipulative tactic. Any large holder or wealthy participant can often push the price in the short term a LONG way before the market adequately responds, and they know that they will also trigger some sheep who believe the sp movement must have some fundamental basis - hence a P&D through even temporary buying pressure only can be a very effective tool to milk the market in certain stocks, if you have enough coin and conviction. You’ll suck in others and can “win” because you got in “early” and are on the right side of the averages if timed effectively. Same applies to shorting imo. Drop and pop.
Anyway, just some thoughts on why some do actually care if “they’re short selling”.
Also, a temporary forced push down, disjointed from a more realistic/sensible valuation of the company, can affect credit opportunities, financing deals and capital raising price levels for the company, and even the “current” assets of individual holders - for example, if I hold 1M GXY shares as my only asset, how much are my assets worth?
$700k a few months back or $1.6M a few weeks back? Makes a BIG difference if I wanted to use that asset as collateral or similar purpose.
So, in that case, I would certainly care if some of that “value” difference was caused by tactical shorting and the flow-on effects, even if they are ultimately “only temporary”.
Imo!
DYOR!
GXY Price at posting:
$1.30 Sentiment: Buy Disclosure: Held
