Steinhoff shares plunged another 50 percent on Friday, before recovering as traders booked profits on short positions taken out after the South African retailer disclosed accounting irregularities earlier this week.
More than $12 billion has been wiped off the market value of the owner of Conforama furniture stores and Poundland discount shops since Wednesday, when it announced an independent investigation into its accounts and said its CEO was leaving.
At 1135 GMT, the stock was down 12 percent in Johannesburg after earlier touching a 14-year lower of 5 rand. It was down 2.4 percent in Frankfurt, where the group has a primary listing.
"This buying we are seeing now is people that sold the shares short when it was in the fifty-fives and the sixties," said Cratos Capital equities trader Greg Davies.
Short-sellers borrow shares for a fee and sell them into the market, in the hope of repurchasing them at a lower price and pocketing the difference.
More than half of Steinhoff's shares that are available to borrow are currently out of loan, according to Markit, a data provider – more than doubling from August and up from 40 percent on Monday. The figure is a record for Steinhoff and the highest for any South African company tracked by Markit.
The cost for short-sellers to borrow shares for a year has more than doubled from its twelve-month average of 1.4 percent to 3.1 percent, according to Astec, another data provider. Both Markit and Astec estimate it would take around ten days of trading for short-sellers to close all their positions.
Another trader in Johannesburg said there was a growing sense that this week's approximate 80 percent share price tumble had triggered "bottom fishing" by buyers speculating the stock was at a level from which it could only go up.
"There does seem to be a little bit of bottom feeding coming in here, we are starting to see in the last half hour or so," Independent Securities trader Ryan Woods said.
Steinhoff's problems deepened on Thursday after Moody's cut its credit rating and raised concerns about its governance.
"Given that allegations of accounting irregularities were raised and rebutted in August 2017 and again in November 2017 it calls into question the quality of oversight and governance at Steinhoff," Moody's said in a statement.
It cut Steinhoff's debt to B1, or highly speculative, from Baa3, the lowest investment grade rating.
Steinhoff admitted to accounting problems earlier this week and its veteran chief executive Markus Jooste quit, raising questions about its liquidity and future.
A lower credit rating means the borrower usually has to pay more to borrow from investors and can reduce the value of its existing debt, forcing some holders to sell.
Steinhoff used debt to fund an acquisition strategy that turned it from a South African furniture group to an international retail empire.
The company has been under investigation for suspected accounting irregularities by the state prosecutor in Oldenburg, Germany, since 2015.
Four current and former Steinhoff managers are suspected of having overstated revenue at subsidiaries, German prosecutors said this week.
Steinhoff has denied any wrongdoing in relation to the German allegations. It has not given any details about the "irregularities" it has identified and has sought to reassure investors about its liquidity.