starsearcher40 wrote: What if you threw a party, and nobody came?
We just had that experience with the NYSE. Yes, we were all excited. Yes, the stock ramped up strongly prior to the listing. And then the day of. Finally, the day the party started.....but there was no party. Nobody came, and the stock has dropped significantly in a couple of days.
I don't like when the short position increases. Generally, it's been my experience that the short position is right far more often than they are wrong. Now that could be because shorting is mostly left to the pros, i.e., it's not a retail thing, and the pros being pros generally are right more often than not. But the fact that the short position increases at all at this point bugs me (a lot)
So here's my lurking and nagging question. If the NYSE party was already priced in (or as we are finding out, not worth the 30% ramp up in the week prior), how much "excitement" is built in already in the share price as we approach legalization? I don't know the answer. The short position thinks they do.
The argument in my head goes like this:
1) Downside argument: Legalization is already built in, and there is already lot of excitement built into the price. But when that excitement ends, is there still upside? Maybe not. Again, use the NYSE as the example here. While the Cdn vote still hasn't taken place, people fully expect the bill to pass, therefore there is no "wait and see" buying. It's ALL in already. The actual bill passing is really just a footnote to all the buildup and work done already. People wanting to buy the stock already have. Retail won't wait for legalization to buy, so if they haven't bought yet, they won't. All arguments above considered: Significant price drop initially, followed by real sales and developments by the company over time.
OR
2) Upside argument
There is still pent-up buying that is waiting for the vote. Some of these will be Funds/Institutions. There will also be a lot of publicity that will spur interest in the stock. Canopy, with its stockpile in the vault, will have the most to sell, and become the most known seller to the retail public.
Questions:
1) Do Funds care about the vote?
2) How eager will Funds buy after the vote, or will they wait for the share price to settle and buy after the froth is out of it.
3) How much pent-up demand for the stock is waiting for the vote?
4) How important is the vote, or is it already priced in as a yes?
5) How much followthrough excitement will there be? None? One day? One week?
6) How many new buyers will buy the stock on legalization? Are there any who are actually waiting as it pertains to buying the stock?
These are just some of the questions that rattle around in my head, but I think it's prudent to think this through for yourself and make your own best decisions.