Straight Path Straight Down After Short-Seller Comments

Straight Path Communications Inc STRP shares are trading lower by $3.00 (7 percent) at $37.70 in Thursday's session. The catalyst for the decline are comments by short-seller Kerrisdale Capital regarding the overreaction in the marketplace to a recent FCC settlement.

On that day, the issue soared from its previous day closing price of $31.41 all the way to $51.50 before falling back to end that session at $41.13. It had been hovering at the $40 area over the next three sessions until Kerrisdale set it in motion to the downside. The firm sees roughly 70 percent downside in the issue.

After a lower open, it rebounded but found resistance just ahead of the lower-end of Wednesday's range ($39.44), peaking at $39.36 and then continuing its mover lower.

So far, the ensuing decline has reached $36.75, but has now rebounded back into the $37.00 level. It's hard to identify support underneath the current intra-day low as there was no trading action between $33.42 and its current low, when the settlement was announced. To fill the void in price action from January 12, the issue would need to reach $33.42.