China Evergrande (OTCQX: EGRNF) stock is up 150%. EGRNF stock rising this much could be considered interesting but only as a proof of the fact that some people will speculate - heck, gamble - on absolutely anything. It’s also an interesting show and tell of what happens in very thin markets. Because - and we agree that we might not have the right number of zeroes here - this could be the result of all of $25 (yes, that’s twenty five dollars) in trades. Which we would recommend as thinking about as a blip in a very thin market rather than an actual indication of anything grand or important.
China Evergrande is in the news of course - they’ve just filed for Chapter 15 in the US. That’s the one where a foreign company stays all actions in the US while they try to sort things out. Sorta like, but not really, Chapter 11 for a US company. What Chapter 15 really does is say that all the main action is happening elsewhere (in Evergrande’s case, in China) so American actions should wait and see what happens in that elsewhere.
OK, so we all know about meme stocks. There’s almost a habit now of thinking that companies going into Chapter 11 means their stock is now worth more. Deluded idea but there we are. And we can imagine someone thinking this is going to be true of China Evergrande. Or even something thinking that that would be a nice idea to propagate.
China Evergrande stock price from Google Finance
As best we can tell volume yesterday was 25,000 shares or so. Which, at a tenth of a penny each, means there was $25 of trade. That’s not a lot to be basing any larger conclusions upon. That trade is this thin does mean that the price could become hugely, massively, volatile. It also means that near no one will be able to trade in any volume - again, as far as we can see there are no market makers, it’s a matched trade market only. That’s a certain problem with anyone trying to make it into a meme stock. There’s near no possibility of any volume here. So speculators piling in cannot, in fact, pile in.
We’ve talked before of this China Evergrande Stock: “China Evergrande (HKG: 6666) (OTC: EGRNF) shares are down 95%. The fall here though means pretty much nothing, really nothing at all. For the quote in Hong Kong remains suspended, it's only the OTC quote in the US that has moved. And volumes there are so tiny that it's difficult to even claim this is a price. EGRNF might trade 30,000 shares in a day at present - we're not even certain whether that's $1.20 total value or $12 total value. It's not even possible to find a market maker to gain a quote in the stock.” That was a month back and volume has fallen since then.
China Evergrande the main company is bust, bust, bust. This American stock quote, EGRNF, might provide some amusement but it’s going to be near impossible to move in any volume. Whatever the price movements it’s just not a good candidate for a meme stock.