Today, Recon Technology (NASDAQ:RCON) is seeing massive selling pressure. Currently, RCON stock is down approximately 50% on volume that is approaching 100 times the daily average.
Indeed, this move is significant for this small-cap stock. Recon is a company which has seen its market capitalization of $200 million cut in half on some interesting news today.
Indeed, RCON stock is a lesser-known stock among most investors. However, among retail investors, this stock has been a rallying cry for some time. This stock started the year off around $1.50 a share, and moved to as high as $17.50 per share during the most recent meme stock rally.
That $17.50 all-time high was actually achieved this morning. Since then, shares dipped to as low as $4.62 on substantial selling pressure.
Whether this was a short attack or not, it appears retail investors were booking gains throughout the day. In late-afternoon trading, this stock had regained some of its losses, and is trading around $6.80 at the time of writing, though this is changing rapidly.
Let’s take a look at the key news item that appears to be driving this stock today.
Recent Contract Announcement Leading to Selloff in RCON Stock
Today, Recon announced its subsidiary, Beijing BHD Petroleum Technology, had signed two ultra-deep submersible cavity pumping contracts with major Chinese companies. These contracts would provide approximately $510,000 in revenue, with the potential for up to $5 million of income if talks continue on further projects on this existing site.
Indeed, a contract is a contract. Any announcement of additional revenue ought to be bullish. Accordingly, it’s a bit of a head-scratcher as to why this stock sold off on the news.
One line of thinking is that this contract is small potatoes relative to the market capitalization of the company. Perhaps investors realized the detachment of this stock’s valuation to its fundamentals. Indeed, the recent meme rally in this stock has taken investors on a very nice ride. And you can’t blame folks for taking their profits at some point.
Whatever the case, RCON stock is one which has shown some pretty significant volatility today. Accordingly, risk-averse investors may want to steer clear of this stock until the dust settles.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.