Leju Holdings (NYSE: LEJU) is yet another of these Chinese microcap stocks that is having a soaring run in its stock price. We just do seem to have a meme stock activity going on here. There's no specific reason for any of these stock price moves other than that there's some movement in the stock prices. There are no announcements from the company (LEJU's last results were a month back) and so nothing to really fire the price into orbit. But off it goes like a rocket all the same.
What we can start to see is that these prices are reverting swiftly. It's not that long ago that something like AMTD or MEGL could stay with outrageously - by any objective standard - absurd stock prices for weeks, or at least days. Leju started to rise yesterday, indeed went up 96%. The ticker is showing it as being another 107% up at pixel time in the premarket trade. But that price ($7 or so) is already down 50% or so from the highs of this morning. So, while we do seem to have a long run of these meme stock moves on China based companies each specific price move seems to be ever less long term.
Leju Holdings from NASDAQ
It's worth insisting again that there's really no objective justification for these stock price changes. Other than that people are willing to buy and sell at these prices. We can call this meme stock status if we wish but the older name for this is a “ramp”. Small company, low market capitalisation, it only needs a bit of a surge to make the price move. So, that happens and the gasping crowd follows. Which is great - for those who bought early. For anyone coming in after the price has started moving it becomes very much a crap shoot. How long will that price keep rising? For we're all really very sure that it will stop and revert. The only interesting question is at what price and in what minute?
All of these meme stocks are great fun if we're on the right side of them. They're horrendous if we're on the wrong. And since it isn't us driving the ramp we're highly likely to be the losers in the enterprise. This is gambling, not even speculation let alone investment.
