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KIT digital, Inc. Message Board

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  • johnmr12 johnmr12 Apr 2, 2012 12:52 PM Flag

    Shorts need shares to cover, BUT...

    Normally I dont py attention to your posts because they really don't make much sense. However, you actually have a valid point this time. If someone with deep pockets plans on buying the company, in theory, they could short the entire float and then make an offer for twice the market price. If the company accepts, they will own all the shares so they dont have to worry about covering. The get the company at a discount taht way. The risk is if they run out of available shares to short, the stock price will go up in a hurry since most shareholders will not be selling down here. Any demand at all for shares will shoot it straight up. Actually, even if the "buyer" isn't shorting, whoever is shorting must be counting on the company needing to issue more stock to keep the doors open. More stock equals more available shares to short into a diluted stock price. The bottom line, if the company is actually able to achieve their revenue and earnings guidance the rest of the year without having to sell stock, the price will be in the stratosphere by the end of the year.

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