Rrao…… If I can chime in, I still will defer to NSX. He can explain it far better than me. There are many reasons.
Some are purely financial for those who target, short and NSS a company. I will remind you to look up the story of Overstock.com.
The folks wanting to keep a company down will target a company and short it causing the stock price to plummet, and then cover their short far lower, or never if the company goes under. Negative chatter on the message boards or spurious articles is a common practice. Remember, it is far easier to scare folks into selling than it is to spur them into buying. Look at the trading here. Asks slaps rarely move the needle, but a series of 10,000 sells drops the bid like a rock. It’s all just for the money. Easy picking if you are big offshore hedge fund that can afford the fees.
The other big reason is to actually do harm to the company and attempt to run them out of business. That happens a few ways. One is damaging the PPS so the company looks bad and harms their appearance. For example, if CELZ continued it run last summer and was trading at .20, it will look like a good startup company getting on its feet. Even though not one business fact about CELZ has changed, what does it look like to the outside world now? It looks like a stinky pinky about to lose its QB status. How does that look? Mission accomplished.
The other way, and Overstock.com went through this, is when the PPS falls and the market share decreases, the company loses its ability to get traditional loans from the baking industry. They look too high risk, don’t meet certain standards, etc. This forces the company to dilute stock for cash, compounding the problem. For example, if CELZ needed $300,000 and we were trading at .03 and they needed to issue a note, how many shares would they have to dilute vs. needing $300,000 at trading at .003? The goal is to force the company into another ugly note and look bad and damage the company.
I ask this question all the time. Who would be against a company that is starting up offering a great new NON MED, NON SURGICAL fix to a common problem?
