Shares of Forge Global (NYSE:FRGE) are in the spotlight today following their debut on the New York Stock Exchange. At the time of writing, FRGE stock is up more than 50%. The company began trading on the NYSE last Tuesday after entering into a business combination with special purpose acquisition company (SPAC) Motive Capital. Prior to transaction fees, Forge Global received gross proceeds of $215.6 million from the business combination. Furthermore, the combination plans were announced last September, valuing Forge at around $2 billion.
Forge operates as a platform where interested customers can purchase shares of private companies. Companies currently listed on the platform include StockX, Altos Labs and Boxabl. So, why exactly are shares of FRGE stock trading higher today?
Why Is FRGE Stock Up Today?
There seems to be no company-specific news to explain Forge’s price action today. Furthermore, a short squeeze does not seem to be affecting price action either. Data from S3 Partners shows that short interest is less than 150,000 shares. S3 managing director Ihor Dusaniwsky explained that, “Buy-to-covers due to a FRGE short squeeze is not the driving force behind this outsized stock price move.” However, short sellers may need to cover some of their positions today, as “they are down over 80% in today’s trading.”
The culprit for today’s price action may be attributed to retail investors bidding the price up. Retail investors are known to trade newly listed names in anticipation of quick gains.
Newly listed SPAC names also often experience volatile price action in their first few weeks of trading, sometimes due to low float caused by SPAC redemptions. This seems to be a contributing factor to today’s big price jump. Indeed, Forge Global saw a redemption rate of about 76% at its merger close.
What’s Next For Forge Global?
Forge CEO Kelly Rodriques will continue to serve as CEO, while Blythe Masters, former CEO of Motive Capital, will join Forge’s board. Masters is known for helping create credit default swaps and has more than two decades of experience with derivatives on Wall Street. Furthermore, the business combination will help Forge improve its platform, fund future growth and “strengthen its network position.”
Looking forward, Rodriques sees “vast opportunities to expand our business and offerings to ultimately create greater participation in private company liquidity for equity holders and investors.”
On the date of publication, Eddie Pan did not hold (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.
