Seemingly out of nowhere, Magic Empire (NASDAQ:MEGL) blasted up over 75% in trading on Thursday. So what sent shares of this Hong Kong-based financial services firm spiking? The downright baffling answer is that no one’s quite sure. With no significant news releases from the company, nor any SEC filings posted, it’s easy to be puzzled. Some posit that the company landed a halo effect from the general recovery in Chinese stocks.
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That’s entirely possible; China pulling back on the COVID-19-related lockdown policy for handfuls of infectees was the kind of sensible policy that keeps an economy from dying in a fire. The fact that Magic Empire is still considered an IPO stock likely doesn’t hurt, either. It might be in a position to compound its gains as both an IPO and a recovering Chinese stock.
It also doesn’t hurt matters that Magic Empire is a long, long way down from its heights. When the company first went public back last August, share prices were up around $117 per share. With shares now trading closer to $2.15, some might believe lightning can strike twice and send the stock screaming back up. For a roughly $2 entry ticket, that could be an impressive win if it pays off. Magic Empire’s position as a fintech firm might unlock such a move; the mobile payments market is poised to hit $12 trillion in the next five years.
The final alternative is perhaps the most nefarious. With no analysts providing coverage and little information available, this may simply be a bit of “pump and dump” already in progress. The gamble is substantial, and its trading pattern is extremely thin. Just what exactly is going on isn’t clear, but the likelihood of something troubling in the wings is high.
