CBAK think for a minute...
Consider a few things..
1. Whether it's a Politician getting caught with his mistress, an actress denying drug addiction, or a CFO denying a contract. Does it really mean anything? Interestingly, Google has "made no comment". Also, don't you think something like this getting leaked would be heavily frowned upon by management? That breaks every SEC rule known to man. However, a leak coming from Google is believable. Damage control?
2. Look how many newsletters picked up the story, Barrons, Wall Street Journal, Bloomberg.. this has circulated every corner of the market. Where there is smoke, there is normally a fire.
3. 18M in volume.. on a rumor? Is there really that much dumb money in the market? Could the "rumor" just be a way to hide an insider leak and buying?
4. Yahoo message boards. It is a bash fest. It is like every known cockroach as crawled out of the woodwork telling "longs" how screwed they are. Do people really want to see others suffer and loose money? Why the hate and spiteful tones?
5. Shorts, we know the stock had been heavily shorted due to the Self Registration. I'm sure many were caught by suprise today and were forced to average up their short.. thus increasing their need to cover. Just as there will be those who flee the stock in the morning, the shorts will also be hammering away. Those shorts have to cover though and with so many short, I believe it will be very interesting to say the least.
6. Company valuation, they are trading less than a 1 P/S. The P/E ratio is not to high either considering they should be profitable in mid 2010. Fundamentally the stock is not that overvalued even at today's close. Not enough to warrant a huge sell off by any means.
I'm sure I could think of more. I do plan to short some at the open, but only as a hedge for the shares I bought A/H. I'm positive the volatility will be so great that I will end up profitable by the end of the session.
Whatever the case.. this is going to be a wild ride tomorrow..
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