stock
Pagaia
+73.11%
closure:0
opening:11.39
High:21.56
low:10.61
cycle:—
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Started her way on Wall Street with a crash. The Israeli fintech company that was merged with Spak about a month ago according to an inflated value of 8.5 billion dollars managed to crash by more than 75% and since then it has moved like a pendulum: one day up and one day down. Today it jumps by 110% and reaches a huge value of 13.2 billion dollars, a jump of 660% in a week. But this is not likely in any way. There is no logical reason for this. After all, it is impossible for the investors to know how to drop the stock and suddenly it jumps like this. For its part, the company has not released any announcement that might explain this crazy jump.
For everyone, of course, this repeatedly reminds us of the famous ‘short squeeze’ that entered the lexicon when shares such as Gamestop, AMC, Blackberry and others jumped hundreds of percent in a short time – but of course it ended the same way in the end: with sharp falls in the shares and high losses for the poor investors that flowed after the dream.
So what, after all, might explain Fagaya’s insane surge? It can be assumed that this is a particularly large short squeeze. A short squeeze is a process of a sharp price increase, which occurs in a stock where there is a large volume of short sellers (called “shortists”). The process of short squeeze is common in cases where there is a short system war, usually after an initial rise in the stock or a positive announcement for some reason, the shortists want to close their position and buy the paper and thus a flood of purchases and a price increase is created – then this is an effect that bounces itself off again, and more shortists They have to cover their losses and try to buy, but there is simply no one to sell them shares, and then the share price goes sky high.
The move of a short begins when the shortists expect the price of the stock to drop, and thus they can “cover” back with the shares they sold at a price lower than the selling price. But if for some reason there is an increase, they are forced to buy. It could also be due to a call from the lender, the same entity that has shares and lent them to the shortists. He can demand the return of the shares and then the shortist has no choice but to buy.
As mentioned, Fagaya was merged with Spak about a month ago in a deal that was accompanied by quite a few problems. The lead underwriter abandoned the offering, the original shareholders of the SPAK company rushed to sell, and the stock, as mentioned, plummeted. Is it a “rebound” when investors believe that the declines were excessive? In the meantime, there is no news that explains the change in trend.
And despite the increases, there is no justification for the company’s value, these are dangerous games of shortists, hedge funds, it’s not an investment, it’s a bet, and as mentioned – like GameStop – it’s likely to end in a crash in the end.
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