As markets opened today, a little-known name turned many heads. Unless you closely follow the consumer staples sector, you might not know the name Blue Star Foods Corp (NASDAQ:BSFC). However, the trends of today indicate that many social media users have learned it. Forums on Twitter (NYSE:TWTR) and Reddit have been exploding since the stock began to rise in premarket trading. While the hype around BSFC stock is strong, it also raises plenty of questions. Penny stocks don’t typically shoot to unprecedented prices for no reason.
What’s Happening With BSFC Stock
Just how high is “unprecedented”? As of this writing, BSFC has spiked by more than 175% in less than two hours of trading. While it has already declined from more than 380%, these types of gains are still significant. The stock spent the past month flatlining at less than $2 per share. Today’s growth spurt has it presently trading at $5.18, up 14% for the week and 150% for the month.
Why It Matters
As previously noted, this sudden rise was not triggered by any major catalyst. There’s no news of an acquisition or the type of regulatory victory that can push a stock upward. In fact, Blue Star Foods hasn’t seen any news in almost a month.
The way it looks from here, BSFC stock appears to be moving on social media speculation alone. This may call to mind images of the iconic GameStop (NYSE:GME) rise of early 2021 that redefined modern investing. However, a quick social media frenzy does not a meme stock make.
Even as the stock has begun to decline this morning, digital investors have begun to slow. Most users still posting about it are not calling for bullish plays. In fact, many are doing the opposite, advising their fellow investors to pull out before the stock falls even further.
$BSFC 💣⚰️ Update. Nice heavy wash, lotto size on range order, I'm out early today. Good luck fellas! pic.twitter.com/hY0au3MORD
— Morg (@morgantrades) January 21, 2022
🚨 Keep a Stop Loss if you grab this at open!! 🚨
— Tiger Woods Trader (@TigerWTrader1) January 21, 2022
Hopefully everyone invested in $BSFC made some 💵💵 because everything is crashing down atm. Get out why you can
— Zak (@Zak931093) January 21, 2022
What It Means
Instances like this are a good reminder of why investors should do their own research when a stock rises unexpectedly. This type of heavy trading volume paired with a low liquidity company doesn’t hint at long-term growth. Rather, it points toward the opposite, which is exactly what we’re seeing now. Fellow microcap consumer staples stock Save Food (NASDAQ:SVFD) is also falling this morning, though not as quickly.
BSFC is falling, and it isn’t likely to stop. Nothing about this scenario seems like a buy-the-dip opportunity. Sometimes it pays to watch a stock in after-hours trading but only if investors are prepared to see its growth trend reverse just as quickly.
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Read More: Penny Stocks — How to Profit Without Getting Scammed
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.
