he shorts have investors really scared about this stock. Broke through 15 and 14 in the space of an hour. Looks like it is in free fall. So, what can turn it around?
1) A collective decision by all (most) curent TDFX holders to either sell their positions, or stop buying/trading it for at least 4 months.
2) An active promotion of TDFX stock by the management to the fund managers after retail investors are out (because the pros will not want to touch a stock that is highly dominated by retail investor/traders because those people (US collectivly) do not act rationally as a whole and damage the pros game plan).
3) A stable to somewhat uptrend in the stock so that once a fund manager buys a few shares, he has something good to look at in his weekly reports and not an eye sour. And then you can expect this stock to move up.
Of course the fundamentals have to stay as strong then as they are today. But fundamentals alone do not make the stock. As long as there are people out there who expect to get a 250% return in 5 months (that is over 900%! annual rate) out of this stock even though (or perhaps because of) they don't understand how Wall Street works and only understand the technology, this stock is bound to go down as more and more of this same kind of person will spread themselves too thin and are forced to sell due to margin call or abandon the stock in disgust/dismay/frustration/(your favourite adjective here) and thus the churning will just make an undervalued stock even more undervalued. In its most basic form a stock will go down until there is no one left to sell it and will go up until there is no one left to buy it (I'm talking about net buy and sell here). I see lots of inflated expectations around, and so there will be lots of future sellers, which in turn means no end in sight yet.
My background is in semiconductor design. And even though I have not touched hardware since I left Allied Aerospace in early 90s, I still understand enough to see how good TDFX's technology really is. But in all the years that I've followed technology, both for the sake of technology itself and as an investor, I have yet to see a company succeed only because it had superior technology.
Best of luck
Sun Tzu |
