Jun 24, 2022
These price shifts are often of a rather slow and steady nature. However, there are occasions when the price might drastically increase or decrease in a couple of days. Unexpected catastrophes, such as wars or pandemics, are one potential source of these significant price shifts. They may also be the outcome of newly discovered knowledge of mysterious phenomena known as black swans. As investors hurry to react, the accompanying short-term volatility may trigger unexpected price shocks.
During a single trading day at us stocks, automobile manufacturer Volkswagen became "the world's priciest corporation," marking one of the largest short squeezes in the market's history. Before this tremendous increase, it was often assumed that Volkswagen was an independently owned corporation.
Because of the market's extraordinarily pessimistic perspective on the company's future, its shares were sold short by an abnormally large number of investors. As a result, the company's stock price declined significantly. The automobile manufacturer Porsche then made an unexpected announcement on October 28, 2008, stating that it possessed a 74.1 percent ownership stake in Volkswagen, which it had just obtained via trading derivatives. 1 Porsche unexpectedly took over the operations of Volkswagen, and not long after that, individual and institutional investors alike hurried to liquidate their short positions in the company.
By any standards, Gateway Industries was a rather unimportant website design company. Its lone employee, CEO Jack Howard, was not regarded as brilliant, even though the company's shares traded for just one cent each. Then, on February 8, 2011, a black swan event took place when well-known media mogul Robert F.X. Sillerman announced that he would be purchasing Gateway, with the transaction taking effect on February 11, 2001. Because of Sillerman's standing in the industry, Gateway's share price shot up instantly by more than 20,000 percent, reaching $2.97 per share. Sillerman subsequently merged Gateway Industries with a few other companies to form his new startup media and entertainment company, Function (X), which he eventually rebranded as Viggle Inc. in 2012.
This takes the record for the greatest loss in a single day previously held by Apple Inc. (AAPL) and exceeds it by 17 months. The price of Meta shares had increased for five consecutive days until a poor earnings report sent investors plunging. The corporation's profitability came in far lower than analysts had anticipated, and this shocking development was paired with the news that Facebook had shown a fall in the number of daily users. The market responded violently to the announcement, which was the first time the corporation had made such a statement.
After cap drops loss, another tech behemoth established a new record for the most profits in a single trading day. The market capitalization of Amazon (AMZN) increased by $190 billion in a single day on January 4, 2022, breaking the previous record set by Apple, which stood at $179 billion one week before.
This encouraging fourth-quarter earnings report emphasized Amazon's sales from online advertising and cloud services, which contributed to the company's 14 percent increase in overall revenue. Amazon also stated that the price of Amazon Prime would be increasing by $20, which would imply that customers of the service would start paying a 17 percent premium very soon.
Zynga (ZNGA), a technology firm that produces online games, announced that it had significantly missed predicted profitability in the second quarter of 2012. As a result, the company's stock dropped by more than 40 percent during after-hours trading that day. In the first place, Zynga has a tight working relationship with Meta (which was once known as Facebook), and the two businesses had their initial public offerings in the same calendar year. The initial public offering (IPO) price of Facebook was $38, but barely three months later, it had fallen to a low of $17.55; this is seen as a historically terrible event.
No biggest investor would have guessed at the onset of the COVID-19 epidemic that a failing chain of brick-and-mortar shops dependent on mall visitors would become the most talked-about company of 2021. Certainly not the management of Melvin Capital, one of many hedge funds that started making short positions against GameStop (GME) in the lead-up to the Christmas season of 2020. These trades were in the multi-billion dollar range. However, short traders made a huge mistake by betting against the market. Retail investors on Reddit and other online communities started noticing unusually high interest in GameStop. These investors suspected that some hedge funds had engaged in naked shorting.