Our good friend G2 raised a question in our discord GAXY room earlier, the summary of which is
Why is $GAXY’s share price is yet to recover? Can Trading 212 limiting its buy impact the price action for such a long time?
The response that I provided him with can be applied to other public company’s stock price as well, which I would like to share here
Well, this simply is a money-maker mindset issue. Say 5% of traders are actively involved in trading on any single day. These five are the people who decide the current price of a stock. Because the security market runs by the basics of supply and demand. Now let’s look at what actually happened to $GAXY: Before T212 imposed the restriction, many UK and European new investors invested in $GAXY and this sudden volume increase brought many other investors from other parts of the world because normally investors who follow the momentum, use relative volume as an index to start investing. So when the demand increased, the share price had increased over 800% in 3 to 4 months time frame. After the Q2 financial call on Feb 16th, the number of people buying $GAXY increased. Most of them were TRADERS, not investors. When they closed their position right before the call, the price started moving down, which was anticipated. But remember, always with OTC stocks with a drop of 20 to 30%, the price action turns the direction. in the case of $GAXY and before that could occur, T212 slapped a ban on $GAXY. FUD got ignited, many new investors panicked and selling pressure increased immensely. Price dropped to 3c from 8c just in a day. Remember this is an OTC stock and no matter how much good results you show investors will not be convinced without seeing some actual move. Once an investor has lost money in a stock that he believes would work for him well, he will seldom buyback. This is investor psychology and not surprisingly enough $GAXY lost more than half of its long-term investors. Most of them will never back. $GAXY needs new investors. Considering the situation in the overall OTC market, new investors are not investing much in OTC stocks. So $GAXY is not getting any new investors. Current investors have not much money left to invest. so not enough buying pressure and hence not much action and the price hangs between 1 – 2c. This is a humble explanation. if anyone has any other reason, can enlighten us please.