/biz/ - Business & Finance

>>23315345
>Has a stock ever had this happen?
if we're talking about the float specifically then KBIO is the most recent one

>https://moxreports.com/kbio-infinity-squeeze/
basically he bought 70% of the outstanding shares of some penny stock people thought were going bankrupt so they shorted it to the death, so whatever the short interest was, it was incredibly very small when only 30% of the oustanding shares were unaccounted for (never mind whatever remaining insider ownership was leftover)

>>22782037
if the shorts had covered I'd say "it's over, pull out and wait for strong dip to re-buy" because the short-term squeeze potential would be over

But they haven't. This is some institution or insider deciding to throw the shorts a lifeline.
Could be a pro-short one. or could be a martin shkreli play. I have no idea.

>Phase two. Forced borrow recall. After briefly hitting $45, KBIO quickly retreated into the $20s. After all, it was still just a defunct biotech stock without a real drug. Even with a bit of cash from Shkreli, the stock was worth nowhere near a market cap of over $200 million. Short sellers piled in to short more in the $20’s on the basis that “this was just a squeeze” that would quickly fall apart.

>As KBIO’s share price had been spiking, short interest had been growing. And Shkreli now owned 70% of the outstanding shares. Then on Thanksgiving Day 2015, when markets were closed, Shkreli tweeted that he had decided to recall his KBIO shares that had been lent out to short sellers. The resulting squeeze was just a simple math problem. When Shkreli recalled his shares, brokers would be forced to buy-in the short sellers, causing it to spike uncontrollably.

I have a theory about the whole shkreli thing. First read this: https://moxreports.com/kbio-infinity-squeeze/

TLDR: KaloBios stock was heading to $0, and everyone was shorting it for easy money. Shkreli stepped in, bought up 50% of the company, and it became impossible for shorts to cover. Price mooned 10,000% and even people with small positions ended up owing hundreds of thousands of dollars. He got arrested one month later for unrelated charges.

I'm not sure about the laws but I'm guessing what he did was technically legal, but upset a lot of important people. It was a blatant pump and dump but maybe since they couldn't arrest him for it, they decide to dig up dirt from his hedge fund days and charge him with that. At the same time, getting the media to hate him for being an evil pharma bro.