Did you know some stocks are losing their value every day? While this isn’t that much of a shock — considering how fickle the stock market is on any given day — it’s important for investors to keep an eye on these two stocks losing value in 2021. That way, you don’t get trapped in failing investments for the next 10 or so months.
The value of a stock is determined by how many investors want to own it — think of supply and demand. When demand for a stock is high and the supply of shares islow, the stock price rises. A lower demand for a stock coupled with higher supply will cause the stock to fall, and its value to depreciate.
And the value of these two stocks just plummeted this week…
Did you notice some of the surprising premarket activity Tuesday morning with companies that have made a lot of headlines this year? Two stocks just lost much of their value and the traders who invested in them are feeling some pain.
Churchill, the first stock, just announced a deal with Lucid Motors that sent shares plummeting as much as 40% overnight.
As I mentioned in my previous video, Churchill Capital Corp. IV (NYSE: CCIV) is a special purpose acquisition company (SPAC) founded by former Citigroup executive Michael Klein. Rumors of a merger between Churchill Capital and Lucid Motors — an electric vehicle-maker — have pushed CCIV’s stock up more than 470% since January.
And now there’s more news out about Lucid Motors confirming its move to go public. They plan on closing the $24 billion merger deal sometime in the second quarter of this year.
However, this morning we saw the stock down more than 30%, tumbling to less than $31 a share after closing Monday’s trading session at $57.37.
That’s a significant difference from how the stock was performing since January, when rumors of the SPAC deal first started making its way down Wall Street.
So why, with good, concrete news would the stock crater like that?
You first need to think about all the investors who were long on the stock since rumors began circulating. Now everyone’s mom, brother and cousin want to jump on the stocks bandwagon at $50-$60, convinced shares will go to $100 and that Lucid Motors could be the next Tesla.
Now here’s a simple trading equation to help us figure out what happened next: If everyone is long on a stock — anticipating the price to rise even more — what does the market tend to do?
It does the opposite.
It punishes them by going against them. If something seems too good to be true, that’s probably because it is.
So now you have all the early investors panic selling CCIV, either because their early enthusiasm is lost, terms of the SPAC deal are lackluster or it’s a major case of “buy the rumor, sell the news” — novice traders buying it.
These first-time traders are hoping the stock will rise, and they hold onto dear life until it does…Which is a terrible strategy and has already caused some traders I know to see their entire 2021 gains go up in smoke…
As for the second stock losing value in 2021, this one has a massive case of crooked insider buying that you don’t want to be a part of…
Check out the video below to hear more about two stocks losing value in 2021. As always, leave your thoughts in the comment section below and don’t forget to subscribe to my YouTube channel to stay up to date with all things options trading.
P.S. WealthPress Senior Strategist Roger Scott has found a way to spot three times, five times and even 10 times gains in less than a months’ time by targeting “microbursts” on some of the market’s most explosive stocks.
Microbursts are quick, punchy moves in small-cap stocks that can return triple digits in a matter of days. In fact, Roger recently signaled a 414% return on CNE in under a week.
And now he’s ready to share this market trick with you.