Among today’s top trending stocks is a little-known company that bills itself as a “leading communications software innovator that powers multimedia social applications.” Paltalk (NASDAQ:PALT) made headlines earlier this month when it uplisted to the Nasdaq after previously trading over the counter.
Paltalk isn’t the only company in its sector who has been enjoying early week gains. Its competitor DatChat (NASDAQ:DATS) has been rising as well, despite recent analysis from a Seeking Alpha contributor that the company is overvalued and has no real revenue.
For PALT stock, though, today’s patterns of growth a pit more unusual.
What’s Happening With PALT Stock?
Paltalk officially began trading on the Nasdaq early in August 2021. Since then, it’s been primarily in the green, but also hasn’t experienced any real growth until today, with shares dipping to $2.95 last week after hovering around $3.50 for most of the previous month.
As of this writing, though, PALT stock is up more than 33% for the day and despite some slight downticks, is still rising steadily. It’s also been a green month for DatChat who, despite a dip early in September, has been on an upward trajectory since then and is up more than 10% for the day. Its stock has been climbing steadily due to heavy trading.
Why is PALT stock just taking of now? As it appears, DatChat has gotten considerable buzz on social media lately and that seems to be spilling over to Paltalk, the communication platform’s much smaller competitor.
Reddit users have also gotten wise to it and have been working hard to send it soaring, specifically on company-specific subreddit r/PALT.
Why It Matters
The forum was launched on Friday, Sept. 24 and unsurprisingly, the stock began to rise as users urged their peers to buy PALT stock on the grounds that it had recently begun trading on the Nasdaq and Wall Street still wasn’t taking note of it.
While the forum itself hasn’t gotten much engagement apart from a few committed users, the initial post argues that “It is undiscovered before today because it was traded OTC and was unprofitable,” indicating that the uplisting was the catalyst that drove this growth spurt.
What we have here is another example of the ever-growing trend of social media users getting excited by a company they see as undervalued and begin to hyping it up. Small tech companies with ties to blockchain features are common favorites for the social media investor circles. Financial analytics platform Fintel has flagged the stock as a likely candidate for a short squeeze, also a common occurrence for market scenarios like this.
What’s Next for PALT Stock
As we know, social media hype doesn’t correlate with the potential for long-term sustainable growth for a stock. This looks like another flash-in-the-pan instance where a stock briefly catches fire from superficial attention and ends up fizzling out as quickly as it heated up.
The stock is already pulling back, and although there’s more of the day left, this points to another classic social media pump. Simply uplisting to a major index isn’t usually enough for a stock to sustain the type of growth that we’ve seen today.
Additionally, Paltalk is small company with a market capitalization just over $40 million. It is not unreasonable to think that it could grow, but until we see actual developments, it will be hard to be too optimistic.
On the date of publication, Samuel O’Brient 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.
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