RE:THE LOOMING RISK OF MAJOR DILLUTIONWant to know who this starsearcher character is? Read the following and see if he checks all the boxes.
https://www.reddit.com/r/Superstonk/comments/mkos3f/analysis_research_of_paid_stock_bashers_same/
Starsearcher80 wrote: So Canopy has only 3 quarters left before they completely before bankruptcy. With no viable options that are going to have any chance in Hell of turning things around in that timeframe (or I would say in any timeframe), they really have no other option than to do a share offering. So let's walk through this one and only scenario.
1) The share offering will be done at lows, which means much greater dillution.
2) Everyone, (well, except the Clowns) knows how much trouble Canopy is in, so the offering will have to be priced really agressively.
3) Shorts know this is coming, so they will start shorting agressively (again), which will only serve to put further pressure on the share price, which will only make the dillution even greater.
4) The only people who will really want to buy the offering (knowing that Canopy is "dead man walking") will be the shorts. They'll buy the offering as a way to cover without having to go to the market. Effectively, they will short the Hell out of the stock, with no fear of covering.
5) For longs, this whole scenario will be Hell on earth. The share price will crater, margin postions (extra stupid people at this point) will get called, and the short postion will laugh all the way to the bank.
So that's how this will play out. Now, the next question to answer is WHEN this dillution will happen.
I would say that the stock, and the current situation of the stock, makes this dillution all but imminent. The company will not wait until they are absolutely desperate, as this will only further hamper the effort to raise funds. They'll want to do it when they can bluff that all is good. Well, all is not good, but it makes far far more sense to do it now than waiting.
The end result will be the same though. Current longs will once again be slaughtered. It will be interesting to see when Canopy pulls the trigger, If people are desperate to be in the stock (don't know why), personally, I would sell and circle around, or if I had no postion, buy on the crush down to the offering price and then whatever price you think it will go to below the offering as people barf up shares everywhere in disgust.
Will there be a bounce up after the carnage? Personally I don't think so. The stock will remain dead-man walking. The financing only serves to stay the inevitable execution for a few months at best. But by then, the writing is truly on the wall and the stock will be crushed further. I would watch out too for different price thresholds of various funds. If the stock drops below their threshold, they sell, which will also put additional pressure on the stock...as if there isn't enough already.
But back to the dillution question. How long? You couldn't pay me to hold right now, because if you're in when it happens, you'll get your head handed to you and then some.