The stock market is enjoying a powerful rally on Thursday, led higher by mega-cap tech stocks. While all eyes seem to be focused on Meta Platforms (NASDAQ:META) stock, U Power (NASDAQ:UCAR) has enjoyed a superb rally on the day as well. As of this writing, UCAR stock is up about 30%. At session highs, shares rose by a whopping 67%.
That said, it has been a very volatile couple of days.
Shares of UCAR opened for trading at $8.10 per share on Thursday, April 20, then soared as high as $75 on the day. From the high, it has been a violent pullback.
For those unaware, U Power made its public debut via an initial public offering (IPO) last week. The company is headquartered in China and was founded in 2013. It describes itself as an “EV company that builds cars for every purpose and everyone” and is “committed to empowering clients to define cars through standardized UP Super Board, realizing Car as a Service (CaaS).”
Essentially, the company builds a chassis that’s compatible with a number of different vehicle types. Referred to as its UP Super Board, the company says it’s “China’s First Mass-Producible Skateboard Chassis-by-Wire.”
For its business, U Power is hoping its approach results in lower costs, improved efficiency and increased “roominess.”
Investment Environment Is Difficult for UCAR Stock
Had UCAR stock came public 18 months ago, it would have likely maintained some of the bullish momentum it saw last week. However, we’re in a different (and difficult) environment right now.
Interest rates have been on the rise, which has made growth stocks and non-profitable firms less appealing to investors. With the exception of Tesla (NASDAQ:TSLA), most electric vehicle (EV) stocks remain out of demand for investors as well. The fact that U Power is based in China isn’t helping matters either, unfortunately.
The reality is that U Power could turn into a fantastic company. But the environment for a “risk-on” EV stock is not great at the moment. That said, UCAR stock could still stand a chance.
According to the company, underwriter WestPark has bought another $500,000 worth of stock after exercising its over-allotment option. New issues tend to have a low float and that can make for some notable outsized moves. With about 52.4 million shares outstanding but a float of just 7.15 million shares, it’s not too hard for UCAR to make massive moves in both directions.
We’re seeing that play out so far on both the upside and the downside. If UCAR shares can clear today’s high of about $6.80, though, it could open the door back to double digits — especially if it gains momentum and traders start to jump on for the ride. That’s not a guarantee, of course. But it’s certainly a potential outcome, particularly if the broader market plays ball.
On Penny Stocks and Low-Volume Stocks: With only the rarest exceptions, InvestorPlace does not publish commentary about companies that have a market cap of less than $100 million or trade less than 100,000 shares each day. That’s because these “penny stocks” are frequently the playground for scam artists and market manipulators. If we ever do publish commentary on a low-volume stock that may be affected by our commentary, we demand that InvestorPlace.com’s writers disclose this fact and warn readers of the risks.
Read More: Penny Stocks — How to Profit Without Getting Scammed
On the date of publication, Bret Kenwell 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.
