It's well known that a group of "large" investors can raise the price of a stock with "small" marketcap simply by buying up and holding as many units of it as they can.

This happened most recently in the famous "GME short squeeze" and "AMC short squeeze".

I was thinking about what transpired carefully and was wondering, what about the other direction? It's easy to see how buying the stock and holding creates artificially scarcity and raises prices. But it's not clear to me how to artificially lower the price of a stock with small marketcap.

One could I suppose use options and buy a large amount of options promising to sell the stock at a low price hoping the market notices this and thinks to itself "well here are some folks with a lot of capital who think that this stock will be worthless"

but that doesn't feel as direct as simply acquiring the stock in the first place. I lack the proper terminology but options feel like a "second order strategy" while buying and holding seems like a "first order strategy".

  • 5
    $\begingroup$ Have you heard about short selling? $\endgroup$
    – noob2
    Sep 13 at 20:33
  • 1
    $\begingroup$ Some famous short sellers just announce publicly their short position on a given company. If the market believe they might be right (based on success of their past shorts), it moves the stock. This is more a psychological lever than tech one $\endgroup$
    – Mayeul sgc
    Sep 14 at 2:59

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