The folks who saw the early trading opportunity in GameStop (NYSE:GME) were geniuses – or at least they had a moment of brilliance. With so many hedge funds levered to the downside, it made sense to go contrarian (however risky that is). But to apply it to Koss (NASDAQ:KOSS) or to any other randomly out-of-favor companies? That was just crazy talk and the parabolic nature of KOSS stock proved it.
As you may have heard, at one point, Koss shares delivered speculators a perfect 20-banger between the beginning of January price and the final trading day of that month. Moreover, on Jan. 27, KOSS stock was up 18 times. Thus, the additional bump up to 20 times must have given late-to-the-game participants a massive confidence boost.
Unfortunately, it didn’t end well. Gambling on high-stakes trading tactics rarely does for the uninitiated. And even for the initiated, they can be incredibly treacherous.
From the Jan. 29 session, if you didn’t capitalize on that 20-bagger right quick, you were facing severe trouble. By Feb. 4, KOSS stock was down below $19, a far cry from the January peak of $64. To pour salt on open wounds, the volatility worsened. At the close on Feb. 19, Koss shares were trading hands at a nickel above $14.
Just to be clear, I’m not talking about a metaphorical nickel – I’m talking just 5 whole cents. That’s not a great situation to be in if you were acquiring shares up in the clouds.
However, it could be worse – and our own Matt McCall suggests that KOSS stock still has a “lot further to fall.” As painful as it is, Koss could represent a valuable lesson for investing newcomers: it’s better to cut your losses than to continue swimming in red ink.
KOSS Stock Proves You Have No Friends on Wall Street
You might call me a hypocrite because I own shares of GameStop. While the latter is true – I do indeed own GME – the former is something I’ll argue against.
I was supportive of GME – back in June 2020. Of course, that was well before the whole fiasco about short squeezes and such. And I do believe in the longer-term narrative for GameStop – and this has nothing to do with complex trading tactics.
Since I have the luxury of watching from a lower price point, I don’t have the same kind of pressure with GME printing red ink. The same can’t be said for those who got into KOSS stock at the highs.
Invariably, social media is rife with messages that those who sold out of shares are weak-handed losers – and that’s probably the nicest thing that’s on the cesspool known as stock market forums. But the real “losers” it turns out are none other than members of the Koss family, who own about 75% of the headphone manufacturer.
You’d think that the Kosses would know a thing or two about KOSS stock. After all, the company and ticker symbol are their own family name, for goodness sake! And yet they don’t see the justification for KOSS priced at $60 a share, let alone higher.
I hope what happened sickens you. Essentially, the little guys collectively bailed out an affluent family which owns significant equity in a struggling business. It’s the classic Robinhood tale but in reverse. The irony is almost overwhelming.
And this brings me to the ultimate point I wish to make about KOSS stock: concocting a conspiracy to justify gambling on a risky investment is the height of mental fracturing in the market. You’ve got to realize that Wall Street is all about money. As such, you have no friends there.
Assuming you do will eventually lead to a backstabbing. The very people you presumed are on your “side” are the ones initiating the selloff that caught you off guard.
If Going for Round Two, Learn the Lesson
Perusing messages on StockTwits.com, I came across one from user “marketp” which I must censor for obvious reasons:
Deepf—–value just doubled down on his position. Game on! Here we go again next week boys! Round 2 with the double bounce from support! We like the stock! Apes like the stock! The stock love us! We are stocks!
I’m not sure if this is meant as a parody or what – social media posts confuse me. But with the masses ready to pile in, you can’t ignore that KOSS stock has a very powerful near-term catalyst.
I’m serious about that. Earlier this month, I covered the bull-bear case for Castor Maritime (NASDAQ:CTRM) for Benzinga. Following a few down sessions, CTRM shares soared off the power of the internet.
Therefore, if you’re looking for a way to comeback following losses associated with KOSS stock, you might get your wish. But please, learn the lesson regarding speculative investments: when you feel it’s time to punch out, go and punch out. Because if you don’t, your “friends” surely will.
On the date of publication, Josh Enomoto held a long position in GME.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.