Fashion design and brand development specialist MGO Global (NASDAQ:MGOL) sparked an unlikely move: MGOL stock actually swung higher as the entire global market stumbled. While the benchmark S&P 500 lost about 2.5% of value, shares of the lifestyle brand portfolio gained about 34%.
Fundamentally, it’s difficult to pinpoint the source of the upside move. According to the company’s website, MGO represents the “exclusive source of the official premium lifestyle brand of soccer legend Leo Messi.” However, the company also stated that thanks to this brand’s success, The Messi Store was sold earlier this year.
For technical explanations of the rise of MGOL stock, it’s important to point out that the market capitalization is only around $6 million. That’s well below the threshold of a nano-cap company, which describes valuations below $50 million. Therefore, it’s possible that with the devastation impacting the major entities, MGO Global simply slipped beneath the radar.
A Possible Short Squeeze Could Be in Play for MGOL Stock
Another more specific catalyst for MGOL stock centers on the possibility of a short squeeze brewing. A short squeeze occurs when bearish traders find their short positions exposed under a bullish wave. Since no upside ceiling exists for stocks, short positions — which involve borrowing the target equity in the hopes of profiting from its downside — can lead to a panic (or squeeze) for the bears if the target asset moves northward.
According to Fintel, the latest reading of short interest is modest: only 5.32% of the float. However, the float itself is only about 738,000 shares. So, it doesn’t take much for bullish traders to “corner” the market.
Interestingly, Fintel’s proprietary Short Squeeze Score rates MGOL stock as 69.81 out of 100 points. This indicates a higher-than-average probability that a short squeeze may materialize.
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, Josh Enomoto 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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
