Kaival Brands (NASDAQ:KAVL) is among the biggest winners in today’s market. Shares of this little-known maker of vape pens are soaring, with KAVL stock up more than 140% and climbing at the time of writing.
This move comes as the company gains a vote of confidence from the Mr.ZackMorris X account. Yup, the same account that the Securities and Exchange Commission (SEC) pursued in litigation, among other accounts.
The SEC alleged that the so-called “Atlas Trading” scheme benefited a few individuals (Mr. Zack Morris and others). In this scheme, accounts would buy large positions in penny stocks, pump them online, and then sell their shares before retail investors could get out.
However, this case has been dismissed, and a number of individuals involved expressed their pleasure in this announcement. Let’s explore what to make of this news and whether KAVL stock is worth buying here.
Why Is KAVL Stock Soaring Today?
Kaival Brands is certainly an intriguing small-cap company from the perspective that it has a product and some analyst coverage (with a bullish one-year price target). Thus, perhaps there’s a fundamental case to be made for this stock, given its ties to the nicotine/vape pen space. There’s plenty of growth on the horizon for these products, and while it’s hard to determine what sort of analysis Mr.ZackMorris and others have performed on this company, there could be something there.
That said, there’s always risk with owning these stocks. Penny stocks can surge on the smallest of catalysts and come back down to earth even faster. And whether the SEC was right or not that Mr.ZackMorris and others pumped stocks before dumping them on retail investors, the question many have to ask is whether this one is worth the risk.
Buyer Beware With Kaival
In general, penny stocks aren’t worth considering for the average investor. These companies are often too small to matter and outside of unique one-off catalysts, generally get crushed by the competition or combined eventually.
Thus, Kaival Brands appears to be another “buyer beware” situation here.
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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.
