If the community of GME shareholders are motivated to buy more shares with the aim of squeezing short sellers, enough demand for the stock could be created to “fulfill the prophecy”. The Volkswagen Short Squeeze Valuation is a very fundamental requirement if you want to work out your Harvard Business Case Solution. While the SEC reported that short sellers were not the main cause of GME’s spike last year, the mere perception that a short squeeze is imminent could be enough to rally the troops. The short squeeze was an effect of two things (too lazy to look up the details now): Porsche having funding issues and tye complicated share structure of VW. In other words, VW’s ordinary stock was overvalued compared to its peers. The consensus of analyst reports at the time suggested that the voting stock of VW was expected to decrease to EUR 140 per share or less in the foreseeable future.
This is a substantial increase since the November 2021 update, when 6.8 million shares were being shorted. The Porsche-VW squeeze of October 2008 is therefore an interesting and important short squeeze to study. What happened in the VW short squeeze In October 2008, a short squeeze triggered by an attempted takeover by Porsche temporarily drove the shares of Volkswagen AG on the Xetra DAX from 210.85 to over 1000 in less than two days, briefly making it the most valuable company in the world. GameStop stock’s current short interest is 18.5%, according to Yahoo Finance, as 8.6 million shares are currently used by bears to express their pessimistic views. New investors in particular, who have been waiting for the perfect opportunity to dive in, could see an initial jolt in share price as the right moment to act. The number ranges from 0 to 100, with higher numbers indicating. The scoring model uses a combination of short interest, float, short borrow fee rates, and other metrics. Buzz on Reddit and other discussion boards incentivizes investors, driven by FOMO (fear of missing out), to jump into GME. The Short Squeeze Score is the result of a sophisticated, multi-factor quantitative model that identifies companies that have the highest risk of experiencing a short squeeze.
The psychological factor is crucial in the GameStop bull thesis. Not only affluent individuals and established institutions contribute. If there is one lesson to be learned from the Volkswagen affair, it is that market manipulation may come from any side. Figure 2: Trending Stocks on Reddit on January 7 pre-market. VW Short Squeeze One company defied predictions and flourished in the middle of the 2008 economic collapse.
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