RE: RE: Tried Calling IR
"I understand the whole concept of shorting, but how does that drivethe price down? If someone sells at $5, how does it keep going down?"
The folks that are going short hope for one or two things (or both) to happen. The first is to cause some panic and cause others to sell driving the price down more so they can buy back at a lower level and/or knock out some stops so the stock price goes into free fall from cascading effect and then they buy back near the end of the day (say between 14:30 and 15:55) at much much lower levels - again, as I have said before - shorts tend not be be investors - they neither believe in nor care about the company or its intrinsic value - they are simply trading to make a profit from 1 cent to dollars - they don't care, nor do they care if they ultimately damage a company/workers or shareholders - in fact it is their best interest to completely destroy compaies so that their value is zero (or close to 0) so that their buy back obligation is low to non-existant. If they can scare a whole bunch of folk into bailing - so much the better - the bigger their pockets - the more they can "sell" and hence the more they can drive down the value of any gien company. You or I selling 1 or 2 thousand shares of a heavily traded, company will have little efect - however, if someone all of a sudden dumps 1 or 2 million shares then that can have a significant effect and I think that is what we are seing here. if you dump a million shares at 5.35 (5.35 million dollars) and buy it back at 4.90 (4.9 million) you have made a cool 435,000.00 is the space of 1 or two hours - not bad work if you can get it - especially if these are naked shorts which is very possible in these cases.
cheers
Rusty