Rule number 1 : Never cut the loss if the only reason you want to sell is the decreasing market price.
Short term market price is determined by supply and demand of shares. And there could be so many reasons for selling, which could be unrelated to the company fundamentals and long-term perspectives, such as new stock offering from the firm, some guys getting margin called, some people wanting to make cash to buy bitcoin, some hedge fund managers taking short position anticipating more incoming block sales from other hedge funds, et cetera.
Only cut the loss when there is an unforeseen event or news that permanently damages the business and the stock's value so much that your previous "undervaluation thesis" is broken.
Otherwise, just wait it out. No one knows when an under-priced stock goes back up, not me, not you, not Warren Buffet, not Carl Icahn, no one.
One can only know (without a 100% certainty) a company's stock could be undervalued if there are reasonable causes. In this case, shares worth billions were sold off thanks to a guy with 4-500% margin, and additional huge amount of shares are shorted.
This is clearly a case for a strong rebound of the stock price at some point in the future. The shorts will cover at some point, and we have a 100 million buy orders GUARANTEED. Also, once the market confirms that the shorts are covering, then all the buyers will come in, so the amount of buy order will be far much more than 100 million. (just don't know how much)
Therefore, it might not be smart to sell as soon as the stock price is just a little recovered...You'd be far better off by postponing the sale of your shares "until the amount of shares shorted are virtually gone".
We just don't know when it is going to happen...It could happen next week, next month, or even next year.
Just be patient!! Like everything in the world, buying undervalued stock and making money TAKES TIME.
Cheers,
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