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Top Financial up 40% - What, this nonsense, again?

Top Financial is a fun meme stock but don’t be fooled into thinking it’s anything else

Update : 30 Jun 2023, 12:11 PM

Top Financial (NASDAQ: TOP) is up 40% again which is all very fun and lovely, But don't allow yourself to be fooled into thinking that this is anything else than another run in a meme stock. TOP itself is a perfectly fine little company which does its job. But it's just in one of those fields, those areas, where stock price movements like this are not justified on any objective grounds. This 40%, like other movements before it, is simply the result of folk playing with trading the stock. 

That's OK of course, stock markets exist to allow folk to trade. But the distinction we have to make is to be on the right side of the price movements. Which means working out why the movements are happening. If Top Financial were about to announce booming results - say - then a 40% rise might be justified on those objective grounds. If the rise is simply because some number of people have thought it fun to drive the stock price up that's also OK. But out reaction should be different if the reason is different. In that second case what we want to know is when are they going to stop that trade? As they have before, of course, Top Financial has had stock price booms before - rapidly followed by busts.

Top Financial stock price from NASDAQ

As we laid out the background before on Top Financial: “Our answer would be no. Top Financial is a small to medium sized financial brokerage operating in Hong Kong. It offers futures and options trading, that sort of thing. Which is pretty much a commodity business - there's a fee for handling the paperwork of such deals but it's nothing exotically exciting. It's true that there's about 6% of the stock out on loan to shorts but that's not really enough to enable a significant short squeeze. The thing is, there's nothing about being a brokerage - which, note, is not the same as being the principal - which could or should lead to such a rise in a stock price.”

TOP is a perfectly respectable brokerage. But a brokerage simply doesn't gain the sort of variability in business flow that justifies a 40% stock price change on any objective grounds.

This is meme stock speculation driving this TOP stock price variation. There's nothing wrong with meme stocks, nor with this sort of price variation. But if we want to take part we've got to know what we're doing. The bet here is what are all the other traders going to do? For there is no objective set of facts driving this price. 

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