Today has been a highly volatile day for stocks with significant retail investor interest. One such stock that has seen volatility present to the upside today has been SGOCO Group (NASDAQ:SGOC). Indeed, SGOC stock nearly doubled from yesterday’s close to as high as $8.23 per share this morning. However, shares have settled down to as low as $5.40 per share in early afternoon trading as this stock whipsaws back and forth.
Indeed, SGOC stock has been a difficult one to nail down. This Chinese conglomerate has been highly volatile for some time. Based in Hong Kong, this company’s focus is on four segments: virtual reality, environmental protection and energy-saving technologies, money lending, and property investment.
SGOC has been targeted by retail traders and speculators as a potential meme stock/short squeeze play. Accordingly, in July, shares skyrocketed from around $2.50 per share to as high as $29 per share. However, given various regulatory concerns due to a tech crackdown by the Chinese government, as well as waning interest in specific short squeeze plays, SGOC stock has since settled down.
Additionally, today, there’s been some conflicting news causing some massive volatility. Let’s dive into what’s been going on with this intriguing stock today.
SGOC Stock Whipsawing on Conflicting News
As with all short squeeze stocks, social media speculation is at the heart of these outsized moves. Indeed, this morning’s surge to above $8 per share appears to be the result of such speculation.
Social media boards exploded with interest this morning. Various users have called for another run to $29, as this stock surged higher on very heavy volume.
However, this afternoon, an intriguing short report from Wolf Pack Research highlighted some serious concerns with SGOCO. The short report is entitled “SGOC: Multiple Arrests, Financial Fraud and Money Laundering.” If that doesn’t get investors’ attention, I don’t know what will.
The report outlines the fact that three key stakeholders in SGOCO were arrested by the Hong Kong police. These individuals were dubbed “masterminds” in an international fund fraud scheme. They were allegedly participants in a scheme to defraud investors. Additionally, the report alleges insiders were engaged in money laundering, among other activities.
Given the concerns around the regulatory backdrop in China today, this report has generated a lot of buzz among investors. As I write this, SGOC stock is violently moving in both directions, as the market is struggling to find the right price for this company.
Where this stock goes from here remains to be seen. However, today’s price action indicates there’s likely to be a lot of money moving in and out of this stock over the near term. Accordingly, investors should take prudent measures to ensure capital preservation with such positions.
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.
