I often make mistakes, and when I do I always try to admit them and let you know, but this time I hit it right on every point. Here’s what I wrote last Monday:
“Here’s my naïve take: We were all wondering how Ubiquiti could have lost the entire 25% they gained on their extraordinary results and guidance. Well, evidently Citron and friends have been selling short and pushing the price down. They have fully established their short. But now they have a problem: How can they close out their position without the price rising too fast? They come out with this short report, which scares out a good number of longs and lures in a bunch of retail shorts. There’s enormous volume of people selling, and Citron buys every share they can get at under yesterday’s close. Then the price returns to normal after a week or so, and Citron is long gone, off to attack some other company.?..
And look, Citron didn’t wait until after their “report” to take their short position…??The fact that they issued their report means they are done selling and ready to buy…duh! (If not they’d be awfully stupid.)”
I then commented that Citron can put this in their books as another successful short (for them!), even if the effect only lasts for a week.
But think of the cynicism! By the end of the week the price had returned to where it had been at the previous weeks close (as I predicted), but in the meantime they sucked in all those poor retail shorts who follow them, and who got killed selling at the bottom, so Citron could buy near the bottom, and close out its shorts. They also scared some innocent longs into abandoning their shares at the bottom too.
I hope that my comments on Monday helped some of you keep from selling out of your shares at or near the bottom.