Reflexitivity
This is a financial concept introduced by non other than a-ole George Soros. Along with his minions, I am sure that this guy has been shorting the heck out of Canadian energy stocks on top of funding the anti-Canadian oil campaign.
YGR shares are trading down into a never ending abyss now hitting $1.32 this morning. With a share price heading down so fast and valuations already at crazy low level, people wonder what is wrong with the company. Is it reserves? Is it the bank pulling the plug? Is it operational issues?
Once these questions and rumours start swirling then real impacts often start to appear: banks get more cautious on loans, may hike rates, contractors may demand more guarantees, higher price or refuse altogether to work for the company, employees feel depressed, etc. At some point these negative really hurt the company.
Short sellers have use this concept for a long time during bear raids. It is a vicious circle pretty hard to get out of. Now even if there is no real coordinated attack on YGR, it is not immune to these effects of reflexitivity. That is why at some point, management has to step up to say enough is enough to bring back confidence to the company as it could have very detrimental effects.
Very large insider buying (not 10,000 shares) or a share buyback is something that brings back stability to the share price to break this vicious downward sprial and is needed here. It is not very costly for both who have the means and it financially makes sense so what is the hesitation?
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