Magic Empire (MEGL) Stock Plunges 90% After Post-IPO Squeeze

  • Magic Empire Global (MEGL) plunged 90% today as this high-flying stock saw momentum revert.
  • Speculative buying interest took this Hong Kong-based company more than 6,000% higher yesterday.
  • Thus, while declining approximately 90% today, Magic Empire is still well above its debut level.
MEGL stock - Magic Empire (MEGL) Stock Plunges 90% After Post-IPO Squeeze

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There’s a popular saying in the stock market that equities generally go up on an escalator and down in an elevator. However, with the incredible parabolic move we’ve seen in Magic Empire Global (NASDAQ:MEGL), investors have found out what can happen when a stock skips the elevator and takes off in a rocket. Today, MEGL stock lost around 90% of its value as momentum very clearly shifted to the downside in this stock.

Thus, perhaps the magic is over.

Magic Empire went public on Friday at a price of $4 per share. This stock then shot to nearly $250 per share yesterday, an overall gain of more than 6,000%. Today, MEGL stock has descended from the clouds, trading around $15 per share at the time of writing.

Let’s dive into what investors should make of these incredible moves in lesser-known stocks.

Where Is MEGL Stock Headed From Here?

Interestingly, insiders who bought into this company’s initial public offering (IPO) last week are still up more than 250% on their investment. And while the selling pressure today has been vicious for Magic Empire, perhaps there are some speculators looking to buy the dip in this extremely volatile stock.

That said, seeing a stock like Magic Empire surge to a multi-billion dollar valuation on sales of less than $17 million is ludicrous. Indeed, the financial services company has traded around 900 times sales, a level which most investors know is completely unsustainable.

Thus, it was only a matter of time before profit takers and traders emboldened by selling pressure would step in. Whether this stock declines all the way to its IPO price or lower remains to be seen. However, it’s clear this trade is over for many speculators — and what an incredible trade it was.

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 Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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