NorthWest Biotherapeutics Inc (NWBO)

[Chiugray]

Continuing the thread.
Modeling a “Large” short squeeze scenario:

Background and assumptions
- The "Unicorn” setup: 1.5B shorts (1.4B synthetic/naked) vs 1.6B outstanding
- Retail “Power”: Retail owns 97.7% of float
- Price elasticity concept: Shorts are trapped unless Retail chooses to sell. Higher prices are required to get each subsequent tranche of shares.
- Demand competition: Post-approval New Money, Retail, and Shorts will all fight for the same limited “clean” shares
- Retail behavior: Assume 20% traders (high elasticity) and 80% are “diamond hand” Longs (low elasticity)
- Timeline: 90 days of volatility and chaos.

The Scenario (strawman):
- Catalyst: MHRA approval (Day 1)
- Strategy: NWBO announces intent to uplist (requires price stay > $5 for 90 days).
- “Gamma” effect: As the uplisting approaches, traders will front-run the built-in structural demand from incoming Institutions buying.

Month 1: "Shakeout"
- Activity: Gaps up and opens at $3
- Retail Elasticity: Retail "traders" trade/sell
- Short Covering: 200M - 300M shares. Initial margin calls on small hedge funds and retail shorts.
- Retail elasticity: Only the Retail traders sell
- Average Price: $3 – $6
- Key point: Retail selling here provides the "escape hatch" Shorts, potentially capping the squeeze before it truly starts.

Month 2: "First betrayal" (Hedge Fund liquidations)
- Activity: As the Price holds > $5 for 30 days, the Prime Brokers lose patience.
- Mechanics: Market Makers begin liquidating HFs to protect their own balance sheets, ie force HFs to buy (at $10) so MMs don’t have to buy later (at $20).
- Retail Elasticity: Longs sell a few smaller "trading tranches" (eg 20% of their position) to lock in some gains
- Short Covering: 500M –600M shares
- Average Price: $7 – $15
- Key point: 100M+ volume trading days do not mean the squeeze is over. It means the mechanical process is “continuing”.

Month 3: "Second Betrayal" (The NSCC buy-In)
- Activity: The 90-day uplisting clock nears completion. FTDs (Fails-to-Deliver) reach systemic levels.
- Mechanics: The NSCC (Clearing House) takes over. Their algorithms ignore "limit orders" and bid whatever is necessary to balance the books and protect the Clearing Fund.
- Retail Elasticity: "Price Elasticity Wall" hits “vertical”. The algorithm must “discover” the price point where Diamond Hand Longs will finally sell.
- Short Covering: The final 600M shares
- Average Price: $18$ – $25+
- Key point: The short position finally covers. The float is "cleansed" and ready for Institutions.

The unique power of “not selling”
- Month 1: Shorts use FUD to create a "relief valve". Selling here stops “Large” squeeze from becoming a “Giant” one.
- Month 2: Retail holding (not selling) forces MMs to turn on the Hedge Funds.
- Month 3: Retail holding (not selling) forces the Clearing House to turn on the Market Makers.

Understanding the math problem of Shorts
- Even if Retail traders (20%) sell all 600M shares, and half go to New Money, the Shorts are still 1.2B shares short.
- Even if Retail traders were 40% of the base, the Shorts are still 900M shares short.

Conclusion:
If Retail understands the math and refuses to sell in Month 1 and 2 “escape valve”, this “Large” squeeze becomes a “Giant” one. Retail’s super power is the unknown: leveraging “Price Elasticity” and “Price Discovery” to take control of the exit price.

As always, IMHO.