but seriously how did u guy know in advance that SPECIFIC SHARE is going to skyrocket?
I know i'm just a follower, it kinda sucks that other claim the glory 1st.
On the basic front then you have supply and demand. Supply is generally fixed (while possible for companies to issue shares or sell some more you don't generally get new shares when it is on a public market and it is a notable event when it happens, sometimes companies will even buy shares back*) and thus if there is a lack of it and people want it then prices go up as people can and will want more of it.
For the sake of being complete then you make money on shares in two occasions. 1) When you sell the shares at a higher price than you bought them for and 2) if the company pays dividends (a cut of their profits) to shareholders. Short sellers still do 1 but they basically sell now when the price is high and only have to pay up in the future, hopefully when the price is low. You can go long (so years in the future you think they will be worth more) or you can go short (years in the future you don't know and don't care, however next month they will have something big so will just keep it for long enough for the price to rise a little and then cash out) but going short is not the same as short selling.
*if the company own their own shares they have a bigger say in how the company is run, don't have to give out as much profits in terms of dividends and so forth.
The skyrocketing up things happens in one of two occasions.
1) The company invents something really special/popular and has exclusive rights to it. You still have idiots -- when Pokemon Go got popular then many investors (and investors themselves will tell you they are generally clueless about anything particularly in depth) lept on Nintendo despite Nintendo only getting a small cut and even then it would only be a fraction of what they get from merchandise and barely changed profits. So yeah you can watch news reports, for films and games then early reviews/leaks, if films are popular then cinemas (a related market -- big film comes, everybody goes to the cinema to see it and buy popcorn) might do well, if you have reports that a pharmaceutical company has a game changing medicine it has exclusive rights to that has passed testing and the disease troubles millions then they will probably be making millions (actually making a medicine is usually quite easy once you know the formula). If a mining company strikes oil/gold/whatever valuable thing people dig out of the ground. Can also happen when a government steps in and plays with the market (subsidies, fixed prices and whatever else) but that is a slightly different topic.
2) Demand needed to satisfy some market force. In this case it was a group of short sellers (covered elsewhere but if you sell something today at 10 but only have to actually give asset over in a week and in said week it costs 5 you buy it all up at 5, give it over and keep the difference. However if it rises to 15 and you have to buy it then you lose money, if it goes to 100 you lose a lot of money) somehow were asleep at the wheel, or maybe just did not expect to be challenged, and had promised to provide more stock than technically exists** (if they didn't then massive fines, fees, interest payments, loss of their liquid assets and whatever else... bad stuff if you are an investment company). By gathering up a bunch of individuals they were able to make it so no stock was available (normally individuals don't have enough money to buy several hundred thousand shares even at low values) and these short sellers needed to get it and would pay almost any price, as would those simply seeing the numbers shooting up and expecting to get a little bit (if you buy in at 100 and sell for 200 you have doubled your money, possibly in a day, even if it eventually goes to 100000). Short selling is conducted somewhat out in the open (there are some dark pools but eh) as someone has to take the other side of the bet so the extent to which the stock was shorted (or at least a low estimate) was visible and they got caught out.
Other times it might be they are the best bet out of a bad bunch.
2a) in more recent times we have seen what some might term aspirational investors. If you look at traditional things like profit and loss sheets, debts held, market share, likely growth and so forth then Tesla is probably one of the most over valued things in history -- they are a small car company with a few charging stations, however some seem to think they are a tech company (every computer user in the world could have a copy of my application tomorrow for the cost of a bit of bandwidth, you have to actually build cars and pay for electricity, hence options for massive growth in tech) and others are filthy hippies and want electric cars to win and think Tesla are THE electric car company so there is that. Earlier in the thread I also mentioned that places like PETA (animals rights nut jobs) buying companies in meat companies to say "we are the shareholders, listen to us and make vegan meat".
You also have the "market share" types. Go look up the profits for Amazon. Even with their shady accounting and tax avoidance (some might say evasion) methods they are still quite small. However as they are owning more and more of everything then investors are still buying and buying and buying stock both because others are buying and buying and buying and because "one day" they will own a lot and start paying out real money to those investors.
**in some ways it might not be as bad as it seems. You have your bets on the price going down due at 7 days and 14 days and when you give it back at 7 the owner might think "this is worthless junk, I will sell it again" and you buy it back to fulfil your 14 day due date. If however a bunch of internet types (or another big investment firm) are holding onto it for giggles and profit then you might be in trouble and have to start offering more and more.
Skyrocketing down, which is something many short sellers would love to see happen and also allows you to make money, happens for much the same reasons as above but the negative/failures there and a few more.
If said game/film company (which might only do one or two works per year) has made a stinker (again early reviews, leaked reports from developers, leaked gameplay/footage/script) it is probably going to suffer.
If a company is denied a loan or has its credit rating drop. A lot of companies don't keep money in a bank account for a rainy day and instead will rely on being able to borrow money if they have unexpected expenses, or take a bit longer to get the profit in. They might also want to get a loan to buy new machines to make more money.
If a company just lost a big lawsuit and is going to be paying out a lot of money.
A company just lost a big contract to do something/make something/distribute something that represented most of their revenue. Apple are notorious for this in getting chip companies to build bigger and bigger factories, only to then say "we don't want your chips any more" in a few years and leaving the chip company with massive factories producing more chips than anybody ever wants.
If the company's main production plant just turned into a warzone (or burned down, or flooded -- see Thailand hard drives some years ago)
If the investors are going to be shown to be idiots -- wework and theranos being two of the big ones in recent times. The former was a sub leasing agency (that is to say they bought long term contracts for real estate and sold it on for short term clients, said short term clients not necessarily always being there to rent something, not necessarily always paying, usually being ones to break things as they are only there for a little while... basically all the horror stories with rental vs ownership of property and how people treat it), but as they made it an app to access it then idiot investors (and possibly some smart ones that cashed out early -- money is money and if you make it off gullible other investors then who cares?) thought they were the next big revolution and would make all the money. They didn't. Theranos claimed to be a medical device that any biologist, medical doctor or indeed half bright high school student would say was impossible but they had a bunch of flashy marketing material and a somewhat attractive woman fronting it that would get on all the covers of magazines and get interviews on news stations (who we should remember are as clueless as anybody in all this -- when was the last time you heard a news station actually do a bit of hard hitting news or ask tough questions to people they interview, indeed those that do tend not to get people come in for their clickbait interviews as much as those that will do a puff piece) and thus drive up PR ratings. A lie might have travelled halfway around the world while the truth is still putting its shoes on but eventually physics/reality does catch up and nobody has yet managed to beat that.
You might have "insider trading" to worry about in this. If your mate is a manager in the pharmaceutical company phones you up and say they realise it is going to fail trials of their newest biggest drug and they don't have anything else (have spent billions getting to that point), and in fact are going to get sued into oblivion as it is worse still and their last drug turns out kills you at the 5 year mark, but nobody outside the company knows yet and you go shorting it expecting the stock price to go down then that would be insider trading. That is the sort of thing very rich and very powerful people get very serious fines, jail time and more for so probably best to avoid that one. It can be hard to prove.
By and large most would say keep an eye out for these massive jump type things if you can but most would be more focused on simple gains. Your profits will inevitably be compared to inflation (how much money decreases in value each year -- in the 60s my grandma might have got a house for £3000 but today £3000 is less than rent for a year sort of thing), interest rates for a basic savings account, indexes (if you bought one share of every stock on an exchange and left it at that). Oh and for all the super smart people they supposedly employ, analysis of all the things in the market they undertake, people (and robots) watching the news for negative and positive things to jump up, insider trading that does not happen (but really happens), reading the terminally boring investor reports and whatever else there are very rarely any investment funds that consistently beat the index discussed in the last point there -- "time in the market beats timing the market" being a phrase you might hear.
This also said basically nothing about general market strategy wherein you care more about things like profit and loss statements, debts, and whatever else. Also nothing about fun things like high frequency trading.
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