There are a few interesting stocks making big moves in today’s market that many investors are starting to pay attention to. One such company is DatChat (NASDAQ:DATS), a small-cap secure messaging and social media platform. Shares of DATS stock surged more than 65% in early afternoon trading after the company announced it would be spinning off its Habitat platform into a separate publicly-traded company.
This move is notable due to Habitat’s model as an artificial intelligence (AI) and gaming-focused platform. With so much interest in these key growth areas, it appears DatChat’s management team is looking to maximize shareholder value as a result of this deal.
Let’s dive more into what was announced and why this stock is seeing heavy buying pressure in today’s session.
DATS Stock Soars on Announced Spinoff
In today’s press release, DatChat noted the company intends to distribute its 75% ownership in SmarterVerse, Inc. (the parent company of the Habytat AI gaming platform) to shareholders. This distribution should ultimately lead to a standalone public company following the distribution, but exactly how that will happen remains to be seen.
The company reports that it intends to focus solely on its core business, with this move viewed as a streamlining of two rather disparate businesses under one umbrella. Interestingly, it should be noted that Habytat is a relatively new offering from DatChat, suggesting this launch, followed by a spinoff, is a strategic move from the company’s management team.
Another key factor that appears to be positively impacting DATS stock today is its seeming affiliation with other Trump-related entities. In previous rallies of stocks tied to former President Trump, DatChat has rallied, likely due to the privacy-focused nature of this secure messaging/social media company. Perhaps the refocusing of its business toward its core offering has investors buying into this thesis once again, and with Trump’s recent Iowa win, there’s some momentum to be had.
Certainly, this is a stock momentum traders will be focused on over the next few days. But with a market capitalization under $10 million after today’s rally, it’s still far too speculative for the average investor to consider.
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, 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.
