Yet another Chinese-based stock is pumping today. In fact, Top Financial Group (NASDAQ:TOP) has seen shares surge more than 600% at the time of writing. Today, TOP stock actually topped out (no pun intended) at an intraday gain of more than 1,180%.
That’s not normal. Accordingly, it’s no surprise to see a host of folks from the finance community chime in with their 2 cents.
Today, Nate Anderson, the founder of Hindenburg Research, published an intriguing Twitter thread on the subject. In this thread, he noted, “For anyone wondering why Nasdaq-listed $TOP is up 1,100% in 2 days… No it is not a ‘mystery’. It is the latest in a years-long pattern of China/HK-based chatroom fueled pump and dump schemes on Nasdaq: 1. Wash trading 2. Chatroom pump 3. Rug pull.”
That appears to be a fair assessment and one which Anderson backed up with data. Let’s dive into his view that TOP stock is a scam and what investors should be wary of with such names.
Is TOP Stock an All-Out Pump and Dump Scheme?
It’s not 2021 anymore, but we’re seeing some eerily similar moves play out in certain obscure stocks in recent days. Certainly, this move in Top Financial, which has brought the company’s market capitalization above the $5 billion level, from around $250 million on Wednesday, is one that typically requires some sort of catalyst.
However, as fellow InvestorPlace contributor William White pointed out, this move appears to be driven by heavy volume but no substantial fundamental catalysts. Thus, it’s a precarious surge and one that’s not likely to last.
And if Hindenburg’s Nate Anderson is right, this is a stock that could be headed back to its pre-surge levels in a snap.
We’ll see. In theory, stocks can shoot to the moon. Maybe this one already has and the ride is over. Or, perhaps there’s more room to run. In any case, TOP stock is clearly an example of why speculators do what they do.
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.
