One of today’s biggest movers belongs to micro-cap company GD Culture Group (NASDAQ:GDC). Shares of GDC stock surged more than 700% in today’s session as the company sees a surge in trading volume. Currently, approximately 5 million shares have traded hands, which is substantial, considering the company’s average daily trading volume of around 50,000 shares.
A 100x uptick in trading volume will undoubtedly produce a substantial move. And, as we’ve seen with other Chinese small-cap stocks of late, these moves can be driven primarily by a combination of small market capitalization and low float. I’ve reported on several similar cases recently, including that of Mangoceuticals (NASDAQ:MGRX).
Accordingly, it should be little surprise to readers that these speculative moves are continuing. Let’s dive into what could be behind this move in GDC stock today and whether such a move is sustainable.
GDC Stock Surges on Few Catalysts
Echoes of 2021 are reverberating throughout the market, with many investors commenting on the similarities we’re seeing to the moves in Chinese small-cap stocks and that of crypto or meme stocks in recent years. Indeed, these speculative rallies certainly are fun to watch from the sidelines. However, as we’ve seen with previous rallies, there’s usually a limit to the exuberance before rational minds begin to take profits.
Consider the previous rally I covered on Mangoceuticals on April 21. The stock breached $3 per share that day, surging from a previous close of around 94 cents per share. Today, the stock is trading right around $1 per share, essentially meaning that investors who didn’t take profits as a result of that rally didn’t make any money.
This rally in GD Culture Group appears to have the same sort of fundamentals. That is, there isn’t a tangible catalyst driving the move other than an apparent surge in demand for a limited supply of shares. When things ultimately settle down and the supply/demand imbalance with this stock is resolved, we’ll likely see a significant selloff. Exactly when, and how fast, are in question. But it’s almost a certainty.
Thus, GDC stock is one that’s far too risky for my blood. Speculators may be watching this company closely, but I anticipate profit-taking to bring this rally to an end in short order. As I’m writing this, the stock has declined from a gain of more than 700% to a gain of around 450%. Thus, we’ll see where this stock ends the day, but the overall trajectory will likely be lower over the next week.
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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.
