Yeah. This is just insane. Maybe markets are efficient in the sense that they are hard to forecast, but they are certainly not rational. It feels like the bitcoin set has found a new playground.
IMO its not irrational at all. This is the strongest stock in a very strong sector, and longs are getting paid over 350% a year to be long. These IPOs tend to only truly die when the lock-up expiration comes up, and for TLRY it will come in January Its the swing shorts that are defying logic. Thinking about revenues and business plan's when there is a 350% a year bill running against you is just ridiculous
Maybe every participant has kind of a rational explanation for their action, but the market outcome is certainly not rational. Just the 350pc alone is a sign that something is amiss. I doubt there are many swing shorts. This seems to be un-shortable at most brokers. At IB I haven't seen it light green yet. Maybe too many people are synthetically short via options and that creates the squeeze as the options get exercised.
BTW, just watching that video. Very good explanation. Thanks for posting. That GPRO and SHAK chart almost looks like TLRY.
I'm not entirely sure that's accurate: Using the example of GPRO, it peaked at $98.47 in early October 2014, a little more than 3 months after the IPO. In less than 7 trading sessions later, it lost more than 30%. At the December 2014 bottom, it had lost more than 45% from the peak, and this was (probably) before the lockup expired. SHAK was similar. It peaked at $96.75 in late May 2015, roughly 4 months after the IPO. In 3 trading sessions, it had lost 26%. By mid-July 2015, (probably) before lockup, it reached a low of $48.21, less than half of its May 2015 peak. With both stocks, there was an immediate large decline in the week after the peak, and an even larger decline in the months that followed. I think it's more complex than "swing short defying logic". Although the stock has been going up in the past couple of months - that doesn't mean it will go up forever. For what it's worth, TLRY's gains have far exceeded those of SHAK and GPRO. TLRY is more like something from 1999. Secondly, although the stock hit a new high today, there have been plenty of opportunities to short it along the way. For example as it went above $120 last Thursday, I shorted some, and covered the next morning below $105. Given the wide range in which the stock is trading, it makes it easier to make profitable trades going short, as well as going long. .
TLRY still running upwards in late after hours... Not sure how non americans are seeing it, the threat of being banned from the US for life is even more disturbing than the short borrow rate.
You are right, its a little more complicated than he made out to be. I did some charts to compare the dips before the lock-up expirations and after. With the red ones being the ones after So in 2 out of 3 the dips do get larger but in the third one the collapse happened before the locku-up. This is not to say that the swing shorts made any money, the borrow rates were off the charts and whatever profit they could have made was more than offsett by the stress. And you addressed my comments that the swing shorts are defying logic by talking about daytrades that you did in the stock. I got nothing against playing this stock short as a daytrade, as a matter of fact, I just located and pre-borrowed some shares on it to daytrade it short today. But is the swing shorts (like that moron Citron) that are completly insanse. Of course, Citron doesn't actually swing shorts very much, his entire business model is to cover a good (probably most) portion of his position right after he attacks the company (kinda like a reverse pump and dump scheme), so he doesnt give a damn if his followers make or lose money