I mentioned in last nights post about well known short positions in ARSC and I think everyone should know just how many shares are short. In less than a year over 6 billion shares have been shorted, that is according to buyins.net. It is an astonishing figure and one that represents greed run wild. The shorts have figured this stock is going down and they have bet the farm it will by shorting it into the ground. What they have not considered is what would happen if their 6 billion+ shares have to be bought back on the open market.
Think about it for a second. There were likely ARSC shares shorted at $.0001 and whoever did that is already down 100%. Then you have shares shorted at $.0002, those shorters will be down 50-100% come Monday, which means those who shorted at $.0001 will be down 300-400%. I hope you are getting the picture. Today’s price action is akin to someone pushing forward that first domino. It set off a chain of events that will lead ARSC trading much higher than current levels.
The problem with shorting a stock is: what if it keeps going up and never comes back down? As recently as Monday ARSC appeared to be the easiest short, a stock that had no life and was destined to be bidless. How quickly things can change. The shorts, who have been fearless thus far, are about to figure out that nothing in this market is easy. With ARSC on the cusp of a big breakout, the formerly reckless shorting of ARSC will turn into reckless covering as those who shorted this stock attempt to cover their shares for the cheapest price possible. Come Monday that will be $.0003 and $.0004. If they wait longer they could be looking at even higher prices.
As I’ve said before ARSC is not your run of the mill pink sheet stock. Not only is it fully reporting with the SEC, but it’s future prospects are bright. They boast a $21 million order backlog. My point is ARSC may never come back down to $.0001. This could be the start of a sustainable uptrend, one which the shorts inevitable have to cover their positions at increasing prices. Essentially we could be looking at a very real short squeeze.
According to buyins.net over 6 billion shares have been shorted. That’s almost 75% of the outstanding shares and could lead to a short squeeze to remember.