Hitek Global (NASDAQ: HKIT) stock is down 87%. True, HTIK stock then rose 24% again after hours but that’s a pitiful recovery. The problem we’ve got here is that there’s absolutely no English language news to explain this. Just nothing out there on the whole web and internet thing.
We can tell that the price move is real from NASDAQ itself. Volume is vast - 12 million shares as against the usual daily average of 490k. But reasons as to the why, there’s not a trace or a smidgeon. Obviously, we can just say more selling that buying but that’s a tautology.
Hitek Global stock price from Google Finance
We do have an attempt at a valuation using discounted cash flow from Simply Wall St. “The total value is the sum of cash flows for the next ten years plus the discounted terminal value, which results in the Total Equity Value, which in this case is US$112m. To get the intrinsic value per share, we divide this by the total number of shares outstanding. Relative to the current share price of US$7.8, the company appears about fair value at a 0.9% discount to where the stock price trades currently. Valuations are imprecise instruments though, rather like a telescope - move a few degrees and end up in a different galaxy. Do keep this in mind.”
That’s a month back. And that might give us a clue in fact. For that’s before the vast rise in the first couple of weeks of August. It might be that that’s the thing which is the anomaly, not the reversal yesterday.
The only other news we’ve got is that the company received an award from government in China for having floated on NASDAQ back in the spring. Which doesn’t seem like something to produce the soar nor the fall.
The real point we’d make here is about this lack of information. Clearly, something has happened to the HKIT stock. Either or possibly both that rise and then fall. But we’ve not real information about either in English available to us out here. Whatever information is driving the two of them is in Chinese and in China.
This is a useful lesson to have about those China Mainland stocks. They’re going to move for reasons we’ll not only not know in advance, we’ll not even know them in retrospect. There’s thus a very large element of gambling, not investment, in any trade in those NASDAQ listed China Mainland stocks.
