Connexa Sports (NASDAQ: CNXA) stock is up 69% overnight. CNXA stock is up on the basis of, well, there is in fact no news about the company. Clearly some people think there is something exciting here - a maker of pickleball automatic service machines - but we have a strong feeling that this is simply a momentum trade and little more. Of course, if new information comes to light we’re willing to change out minds. But as far as we can see there’s isn’t anything specific.
The details of what’s done at Connexa: “Connexa Sports Technologies Inc. operates as a sports company. It offers Slinger Launcher, a portable padel tennis ball launcher and pickleball launcher. The company also offers Gameface AI, a performance analytics application for sports. It delivers products, technologies, and services across the watch, play, and learn activities in sports.” And, well, yes, we know pickleball is ever more popular and yet still. The latest results show substantial revenue growth but $22 million of losses on $10 million of sales, well, yes.
There’s also nothing new since those results were published, not that we can see.
Connexa Sports stock price from Google Finance
The other thing to note is that the market capitalisation is under $2 million. That is, it’s difficult to think of Connexa as even being large enough to be a microcap.
Given the lack of specific news and also that microcap status we thus come down on the side of this price movement just being one of those things. It’s possible to think of it as perhaps being nefarious, someone running a pump and dump. Buy some stock, talk up the price - in a microcap and for a short period of time this will work - then sell out at the higher price achieved and watch as those following the momentum trade lose their shirts.
It’s also possible to describe this without nefarity. The price begins to move, the circling crowd spots that and piles in in the momentum trade. Much the same happens in the end of course. Without any substance to the price move it deflates and those who bought in at higher prices lose their shirts again.
Our advice therefore comes back to that old stock in trade. If we don’t know why a price is moving then we can’t know when it’s going to stop doing so or even reverse. In the absence of such information this is therefore gambling, not investment.
