However.......it is the "longs" who truly determin
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Posted On: 04/10/2017 2:48:49 PM
Re: The Lieutenant #32457
However.......it is the "longs" who truly determine what the spread is, and where the value of BLTA trades at any given time.
I would argue the opposite. The longs generally don't have multiple open orders on the Bid, so the narrow spread between Bid/Ask is almost entirely determined by market makers even for massive companies like AAPL. Except for blue chips, the market makers tend to be high-speed algorithms programmed into a hedge fund or financial institution's trading platform that allows for fractions of a penny profit per trade. With high volume, this yields millions in profit. It's one of the many reasons I never day trade blue chip stocks. Computers cannot be beat through day trading.
For penny stocks like BLTA, the day traders determine the company's market cap. Among other things, the longs only benefit if the demand for the stock causes the market makers to gradually increase their Bid/Ask while maintaining a contant spread. The longs simply allow for higher volatility by decreasing the "real" Float, which is why a stock like BLTA can increasing 40-50% on less than $100K. The vast majority of shares are being held and aren't trading. It's the only explanation for a company with 9.3B O/S and only a few million daily shares traded. The market makers really only provide liquidity and make a small buck off the spread.
The good news is that we'll see the benefit of having an overwhelming amount of shares held by long investors. Creates a slingshot effect when there is a game-changing PR or series of events (like when we get the Part 121...). As Delta so eloquently put it, the value of this company will be higher than what one would predict using a simple industry multiple, because we lack substantial debt. My contribution to the "BLTA will reach a dime by certification" perspective is that the shares held by longs will force the price to increase much faster than if we had active trading here, in the 100-200M shares/day range. Makes the future of this company seem a lot more attractive for current shareholders.
I would argue the opposite. The longs generally don't have multiple open orders on the Bid, so the narrow spread between Bid/Ask is almost entirely determined by market makers even for massive companies like AAPL. Except for blue chips, the market makers tend to be high-speed algorithms programmed into a hedge fund or financial institution's trading platform that allows for fractions of a penny profit per trade. With high volume, this yields millions in profit. It's one of the many reasons I never day trade blue chip stocks. Computers cannot be beat through day trading.
For penny stocks like BLTA, the day traders determine the company's market cap. Among other things, the longs only benefit if the demand for the stock causes the market makers to gradually increase their Bid/Ask while maintaining a contant spread. The longs simply allow for higher volatility by decreasing the "real" Float, which is why a stock like BLTA can increasing 40-50% on less than $100K. The vast majority of shares are being held and aren't trading. It's the only explanation for a company with 9.3B O/S and only a few million daily shares traded. The market makers really only provide liquidity and make a small buck off the spread.
The good news is that we'll see the benefit of having an overwhelming amount of shares held by long investors. Creates a slingshot effect when there is a game-changing PR or series of events (like when we get the Part 121...). As Delta so eloquently put it, the value of this company will be higher than what one would predict using a simple industry multiple, because we lack substantial debt. My contribution to the "BLTA will reach a dime by certification" perspective is that the shares held by longs will force the price to increase much faster than if we had active trading here, in the 100-200M shares/day range. Makes the future of this company seem a lot more attractive for current shareholders.
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