MGO Global (NASDAQ: MGOL) stock is up 57% this morning premarket. There's no new burst of news to back this up. How could there be, the IPO was only a few months back. Therefore all relevant information has already been announced in that IPO prospectus. Well, unless something truly extraordinary has happened all that news should already be on the table.
On the other hand launching an IPO is taking a guess. Sure, it's a well informed guess by people who have done this before but it's still a guess. No one really does know the value the market will place on a business or proposition until people have to hand over their actual real cash for shares in the company. The IPO price is always a sighting shot and no one ever really knows what it should be. It's always an estimation of demand. That the price has declined from $4.65 (launch was at $5) to the current $1.20 (Friday's close) shows that the sighting shot wasn't all that accurate. So, what's causing the rise in the price this morning?
There is no particular news. We did have the annual report but that was back at the end of March. Nothing specific since then. Well, OK, we did have that news that Messi was going to Saudi Arabia for $300 million a year or more and then that he wasn't. But that shouldn't affect his clothing brand manager that much.
MGO Global share price from NASDAQIt's also a little late in the IPO process for the managers to still be trying to run the green shoe - that should all be well over by now. It's also a little early for anyone to be unloading restricted stock or even announcing that they'll not be doing so.
So a reasonable guess is that this is just a meme stock speculation. There's a short position of nearly 9% of the stock, a much higher than that portion of the free float. So, yes, it could be people trying to engineer a short squeeze here. The market cap is just under $18 million, meaning it wouldn't take much buying to set off a price rise. It doesn't even need to be an attempt at a short squeeze in fact. It's a small enough market cap that it would be easy enough to trigger a momentum trade.
The problem with both of those as explanations of the current price move is that they could be true. But we don't know when they'll stop being true. Either would reverse, in time, but we don't know when and at what price. They're thus risky things to try to trade.
The only other explanation is that Q1 results come out tomorrow. And a 50% and more boost to the stock price before we see what those results are, well, that seems a bit hopeful really.
