Pennies to me means OTC reverse split levels. I do not mean $.02.
Most everyone here is underwater. I simply am providing a trading prospective on how to pull some principal out without adding much more risk if it heads lower. How to get money back from the shorts who destroyed shareholder value if you will.
When a biotech company stock in a Phase III loses support levels its market cap is decimated, almost free falling -- as in the position they find themselves in -- sometimes they do not recover to previous stock levels before the report of results and the stock continues to trade lower or it remains range bound. If this stock price doesn't get over $3 soon it could remain at these levels for a while until something causes it to break support below or resistance above. If the company has no positive news to change momentum to the upside what happens over time is subsequent capital raises will need to be made at lower price points and that will mean it is undoubtedly going to test its lower support (where buys normally come in). The market cap will fall with the toxic financing as well. If that occurs what you could see is the stock fall below $2 support and then possibly below $1. Shorts see toxic capital raise times as opportunity to make easy money. Shareholders understand that they should buy lower too. For example GALE announced financing, its support broke. Today it dip into an area that attracts shorts and momentum traders. But the bottom may not be known yet. Once market cap hits a value of interest buy/sell volume will follow, the bottom will reveal itself, that's a given. GALE is now near $150 million. And if its market cap continues to trend lower, well you can bet I along with others will be adding more shares as folks sell it down. I had a very light position as it is in a Phase III competitor to my larger holding TPIV. (I also saw it as undervalued Phase III). Added a few shares near the low today. Will add more significant more if it falls below $100 million market cap. Retail shorts who traded it down to these levels, hitting shareholders sell triggers along the way, will need to return their shares at a certain point. I expect that I will be able to pull out my complete principal at the expense of shorts who took my "light holding" in GALE down once they scrabble to return shares and its market cap recovers a significant move.
All kinds of buyers will be attracted at a certain point on this stock too if it trends lower, and its market cap falls. Those who post warnings see it heading towards zero. But, there is a price where even a market "assumed to fail" study will attracts momentum traders. And it will also attract new investors who can take a Phase III low entry gamble. It can also attract institutional investors who could be enticed to buy shares on the open market with minimal downside risk, but great upside potential. A win win for them, even if they think the study will fail, they can still make money at the expense of other institutional holders whose bets are that this is heading to zero, taking it from them as news hits that they bought in. Traders will come to buy that pop news. If that does happen then yes, you can see squeezes without fundamental company news. Honestly depends on how low the market cap dips and buy/sell volume where to sell. And on the trading action on where to set sell triggers. But yes, folks can pull out a good chunk of their principal investment back from the shorts if it continues to fall. And then buy the same shares they sold once it falls back down from the high if they really want those shares.
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