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How do you know that?

Cupertino95014 4y ago
Picture 10 elephants trying to get through a 4-foot doorway, all at once. If the volume of sell orders gets too high, the exchange shuts down trading in that stock. If it's high but not "too high" then the price they all get will be significantly less than what they expected.
- garbagetime 4y ago
  > If it's high but not "too high" then the price they all get will be significantly less than what they expected. My question is: how do you know that?
  - Cupertino95014 4y ago
    A sell order has to match a buy order. Apparently, on the 27th, a huge number of people wanted to sell 232,316,600 shares when it was 129. There weren't that many buyers at that price, so they got out somewhere between 129 and 97. Date Open High Low Close* Adj Close* Volume Oct 28, 2022 99.58 100.85 97.51 99.20 99.20 95,728,200 Oct 27, 2022 97.98 102.50 96.38 97.94 97.94 232,316,600 Oct 26, 2022 131.68 135.55 128.53 129.82 129.82 82,791,500 Oct 25, 2022 130.88 138.35 130.59 137.51 137.51 38,433,200
SturgeonsLaw 4y ago
There has to be another party on the other side of every trade. If someone wants to sell Meta stock for $300, there needs to be someone who wants to buy it for $300. Exchanges have a collection of their participant's bids ("I will buy for this price") and offers ("I will sell for this price"). When a bid is matched with an offer, the transaction goes through. Now this is the important part - there are only so many people willing to buy for $300. If there is a mass sell off, all those offers are consumed, and the exchange starts filling the offers of people who would buy for $299.99 (or whatever the next lowest price is). Once those offers are consumed, further down the price ladder we go. That alone will ensure that not all sellers are getting top dollar, however a market selloff like that would trigger a cascade of lower prices (buyers withdrawing their bids and relisting at a lower price, or not relisting at all), along with things like stop losses and algorithms getting triggered.
- garbagetime 4y ago
  What if there are well-funded buyers who think the stock is priced fairly?
  - SturgeonsLaw 4y ago
    That's a different scenario. The previous comment said: > If they all tried to exit at the top Assuming that "they all" means "the vast majority of shareholders", then sell pressure would be higher than buy pressure by definition, and the price would drop. If there was enough buy pressure to absorb the sell pressure, then we're in a scenario where half or less of the shareholders are trying to exit.
quickthrower2 4y ago
There would not be enough buyers. If there were you would have an absurd situation where there is 650bn chasing the shares at that price based on the same public information that is making the “Other half” want to sell everything at that price. That might be possible with more “rigged” markets like cryptocurrency shitcoins. But I can’t see it is possible here.
- garbagetime 4y ago
  I agree that the shareholders would never actually all sell in unison without there being some motivating force for that to happen. But that doesn't seem relevant to the question at hand - whether the $650 billion was "literally lost".

Picture 10 elephants trying to get through a 4-foot doorway, all at once. If the volume of sell orders gets too high, the exchange shuts down trading in that stock. If it's high but not "too high" then the price they all get will be significantly less than what they expected.

garbagetime 4y ago
> If it's high but not "too high" then the price they all get will be significantly less than what they expected. My question is: how do you know that?
- Cupertino95014 4y ago
  A sell order has to match a buy order. Apparently, on the 27th, a huge number of people wanted to sell 232,316,600 shares when it was 129. There weren't that many buyers at that price, so they got out somewhere between 129 and 97. Date Open High Low Close* Adj Close* Volume Oct 28, 2022 99.58 100.85 97.51 99.20 99.20 95,728,200 Oct 27, 2022 97.98 102.50 96.38 97.94 97.94 232,316,600 Oct 26, 2022 131.68 135.55 128.53 129.82 129.82 82,791,500 Oct 25, 2022 130.88 138.35 130.59 137.51 137.51 38,433,200

SturgeonsLaw 4y ago

There has to be another party on the other side of every trade. If someone wants to sell Meta stock for $300, there needs to be someone who wants to buy it for $300. Exchanges have a collection of their participant's bids ("I will buy for this price") and offers ("I will sell for this price"). When a bid is matched with an offer, the transaction goes through. Now this is the important part - there are only so many people willing to buy for $300. If there is a mass sell off, all those offers are consumed, and the exchange starts filling the offers of people who would buy for $299.99 (or whatever the next lowest price is). Once those offers are consumed, further down the price ladder we go. That alone will ensure that not all sellers are getting top dollar, however a market selloff like that would trigger a cascade of lower prices (buyers withdrawing their bids and relisting at a lower price, or not relisting at all), along with things like stop losses and algorithms getting triggered.

garbagetime 4y ago
What if there are well-funded buyers who think the stock is priced fairly?
- SturgeonsLaw 4y ago
  That's a different scenario. The previous comment said: > If they all tried to exit at the top Assuming that "they all" means "the vast majority of shareholders", then sell pressure would be higher than buy pressure by definition, and the price would drop. If there was enough buy pressure to absorb the sell pressure, then we're in a scenario where half or less of the shareholders are trying to exit.

quickthrower2 4y ago

There would not be enough buyers. If there were you would have an absurd situation where there is 650bn chasing the shares at that price based on the same public information that is making the “Other half” want to sell everything at that price. That might be possible with more “rigged” markets like cryptocurrency shitcoins. But I can’t see it is possible here.

garbagetime 4y ago
I agree that the shareholders would never actually all sell in unison without there being some motivating force for that to happen. But that doesn't seem relevant to the question at hand - whether the $650 billion was "literally lost".