Cellar boxing refers to a controversial practice within the stock market where market makers or other financial entities allegedly engage in activities designed to keep a stock's price at a very low, tradable level, often referred to as the "cellar". Here's a general overview based on available information:
Definition: Cellar boxing involves manipulating a company's stock price to drive it down to a deficient level, typically below one cent, where it becomes difficult for the stock to recover. This is purportedly done by continuously selling shares, including potentially nonexistent or "naked" shares, into any buy orders that appear, thereby preventing the stock price from rising.
Mechanism:
Naked Short Selling: This involves selling shares without first borrowing them, essentially betting that the stock price will decline. If a stock is cellar boxed, naked short sellers can profit by buying back the shares at a lower price later or by covering their short position with the shares they sold.
Market Manipulation: By controlling the order flow and having visibility into buy and sell orders, market makers or large traders might engage in transactions that keep the stock price artificially low. This can involve selling into every buy order or using other tactics to ensure the stock doesn't gain traction.
Impact on Companies:
Companies that find themselves in this situation often struggle to raise capital, which can lead to financial difficulties, delisting from major exchanges, or even bankruptcy.
The strategy aims at benefiting those who are shorting the stock by keeping the price low or reducing it further, potentially squeezing out long-term investors or the company itself.
Controversy and Regulation:
Cellar boxing is considered by many to be a form of market manipulation, which is illegal. However, proving such activities can be challenging due to the complexity of market transactions and the potential for legal gray areas.
There have been discussions and allegations regarding this practice, especially in online forums and among investors of microcap or small-cap companies, but explicit regulatory action or acknowledgment of cellar boxing as a widespread issue has been less clear.
Online Sentiment: Posts on platforms like X might reflect sentiments or strategies that align with or discuss cellar boxing, often from the perspective of investors who feel their investments are being unfairly targeted.
It's called cellar boxing I believe:
Cellar boxing refers to a controversial practice within the stock market where market makers or other financial entities allegedly engage in activities designed to keep a stock's price at a very low, tradable level, often referred to as the "cellar". Here's a general overview based on available information:
Definition: Cellar boxing involves manipulating a company's stock price to drive it down to a deficient level, typically below one cent, where it becomes difficult for the stock to recover. This is purportedly done by continuously selling shares, including potentially nonexistent or "naked" shares, into any buy orders that appear, thereby preventing the stock price from rising.
Mechanism:
Naked Short Selling: This involves selling shares without first borrowing them, essentially betting that the stock price will decline. If a stock is cellar boxed, naked short sellers can profit by buying back the shares at a lower price later or by covering their short position with the shares they sold.
Market Manipulation: By controlling the order flow and having visibility into buy and sell orders, market makers or large traders might engage in transactions that keep the stock price artificially low. This can involve selling into every buy order or using other tactics to ensure the stock doesn't gain traction.
Impact on Companies:
Companies that find themselves in this situation often struggle to raise capital, which can lead to financial difficulties, delisting from major exchanges, or even bankruptcy.
The strategy aims at benefiting those who are shorting the stock by keeping the price low or reducing it further, potentially squeezing out long-term investors or the company itself.
Controversy and Regulation:
Cellar boxing is considered by many to be a form of market manipulation, which is illegal. However, proving such activities can be challenging due to the complexity of market transactions and the potential for legal gray areas.
There have been discussions and allegations regarding this practice, especially in online forums and among investors of microcap or small-cap companies, but explicit regulatory action or acknowledgment of cellar boxing as a widespread issue has been less clear.
Online Sentiment: Posts on platforms like X might reflect sentiments or strategies that align with or discuss cellar boxing, often from the perspective of investors who feel their investments are being unfairly targeted.