stock market (picjumbo photo)
So what happened to Pagaya that doubled its value in one day? It is not too much to exclude the following critical thing: Fagaia completed its merger into American SPAC, the situation in the markets and the dissatisfaction of the investors with SPAC worlds caused the shortists to open significant positions against the stock, only then something interesting happened. The investors in Spak did not sell goods, the stock did not break down and the shortists found themselves exposed and began to attack anyone who was willing to sell them goods, and there was one who did it and doubled his money in one day.
Fagaia is a fintech company, but that’s not why the big boom in the stock was created. In the capital market, they explain that usually, after completing a merger of SPAK, its promoters usually put hedge funds into the merged company, only what happened here is that the markets started to shake, the volatility increased and investors did not want to buy the paper. Or at least that’s what they said.
More in-
Such a situation beckons the shortists and they have opened significant positions in the belief that if no one buys after the merger with the SPAK, then very quickly people will start selling – they wanted to be there.
Then something interesting happened, it turned out that not many of the shareholders of the air-conditioned SPAK sold and those who sold really lowered the price of the paper, but the turnovers were low, on the order of a few hundred per share at most and this is not enough to cover with goods and close the positions.
At that time, the stock started to fly, because the shorts wanted to cover and realize the profit from the day of the merger, and then Andralmosia began. The shorts wanted to buy at any price and there was no one to sell except when the stock doubled and thus the profits of the position were wiped out and those who managed to close it did so at a loss.
On Thursday, the stock was traded at the level of $5.35, when the turnover was only 192.8 thousand shares. On Friday, the shorts already started meeting with sellers but at a price of 11.7 dollars per share when the turnover jumped to 3.3 million shares. And here is the whole story, not fundamentalist data, not economics, not anything special – shortist stories, that’s the whole story.
Let’s mention on the sidelines that a short operation is actually the question of paper, that is, a person receives a share from someone at a price of, say, $5 and undertakes to return the share or the $5 to him at a specified time. usually several days. If the stock goes down, the person who took and sold the stock for $5 buys it back on the market for $3 and returns it to the person who borrowed it from him. But if the stock jumped to $6, then he has to buy it at the high price and return it, and here he loses.
If so, as the price of the stock rises above the price determined by the short, the person who opened the position loses a lot of money. Usually the trading rooms require very heavy collaterals from shorters, so if the stock escapes upwards, the short of the trade can create a forced closing of the position, then don’t be jealous of the shorters. The trading room can also take another safe, say a better long-term stock, such as a bank stock and realize it before it has exhausted its upside potential.
In short, what happened in the last few days in Pagaya is a story of the shortists, aggressive, speculators with high, very high risk.
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