|
|
|
|
|
|
by divtxt
5322 days ago
|
|
|
1. Why would management care about the price? The founders and early investors have already taken a lot of cash out. (one of warning signs in this IPO, btw) 2. I expect it's (mostly) illegal for a company to manipulate their stock. One option is to buy back shares, but I doubt that's a good use for their cash at this stage. 3. Even if illegal methods were an option, how would they keep the price up? |
|
|
They make a hunk of their shares available for borrowing by people who want to short the stock. Since a lot of people want to short Groupon these days, they take advantage of the stock's availability to do so - which serves as a negative indicator and drives the price down.
Once the price has been driven artificially lower by the pent-up short demand, then good or even neutral news about Groupon will panic some of the shorts, forcing them to buy to limit their losses - but since the Groupon float is so tiny (there's not that many shares out there), the panic buying will cause the price of the stock to jump sharply. That in turn panics more of the shorts, which inspires more buying, which raises the price more, which inspires more buying...
Remember, when only 5% of a company is publicly traded, the price of the stock has a lot more to do with its traders than the company. No one's trading on fundamentals here - right now people are just playing supply and demand games with the dumb money.
I could be wrong, but I predict some crazy whipsawing of the stock price in the months ahead, with the institutions who brought Groupon to market making money on the way up and on the way down.