DroneShield out of orbit
A hype stock meets gravity the moment its insiders cash out.
When that former market darling, DroneShield, dropped by over 30 per cent in a single day last week, you could almost hear the value investors exploding with schadenfreude. Their basic numeracy prevents them from riding a hype stock like this one, often to their very real detriment – at least in the short term. So it's always a relief when a bubble finally bursts.
By August, even a 21-year-old student of value investing was capable of showing that DroneShield stock was insanely overvalued. Of course, none of that dissuaded brokers from slapping buy recommendations on the stock.
Sociological analysis is actually a far better tool to understand the DroneShield share price action than numbers on a spreadsheet. As anyone with experience in markets knows, in the short-term at least, newsflow, fear, and greed often have greater influence on a share price than mathematics.