WTF happened - Unfortunately how our market works

I think this deserves a new thread for all those wondering WTF happened in the last couple of days:

https://hotcopper.com.au/posts/66938920/single

https://www.afr. com/street-talk/short-seller-puts-newcomer-weebit-nano-in-a-raising-spin-20230323-p5cum5

Short-seller puts newcomer Weebit Nano in a raising spin
Anthony Macdonald, Sarah Thompson and Kanika Sood
Mar 23, 2023 – 9.33pm


Newly elevated Weebit Nano’s has had a rude introduction to the ASX’s top grade, smashed by short sellers on the eve of its biggest ever equity raising.

Weebit Nano, an Israel-based semiconductor components company worth about $1 billion, entered the S&P/ASX 300 on Friday, which saw index funds interested in the stock for the first time and snap up a record number of shares.


Weebit Nano’s been on a huge run, and enough to get it into the top 300 ASX- listed stocks. Jessica Shapiro

Three trading days later, on Wednesday, the index funds’ trades settled, and their newly acquired shares were tipped back into the borrowing pool, giving hedge funds the chance to place hefty bets against the high-flying Weebit Nano for the first time.

The hedge funds didn’t muck around, shorting the pants off the stock and sending its shares down about 20 per cent in afternoon trade. Stockbrokers UBS and CommSec did the bulk of Wednesday’s volume, according to Bloomberg data.

With the stock down 20 per cent for the day and 37 per cent in a fortnight, and markets jumping around, Weebit Nano’s board decided it was prudent to hit go on a mooted equity raising before things got worse.
So they had Jefferies and Canaccord Genuity launch a $45 million institutional placement - all but covered - on Thursday morning.

The raising was at $5, another 10 per cent lower than the already smashed last close.
Weebit Nano’s steep fall and big volume triggered the ASX’s monitoring system, with the exchange whether the company was sitting on any undisclosed information that may be material to its share price.

Weebit Nano fessed up to the raising - but said nothing was determined until after the close on Wednesday, once the damage (shorting) had been done.

The whole affair left a bad taste in investors’ mouths. Yes, it was plausible that the stock was shorted because it had run so hard, but the timing was deplorable.

Two questions lingered post-raising: who knew the raising and when, and who’s sitting on the Weebit Nano short...