MingZhu Logistics (NASDAQ: YGMC) stock is up 86% today. That there’s no news on YGMC stock would seem to indicate that we’re seeing here just one of those common enough flurries in a microcap stock. If this situation changes then we’ll update, obviously, but as far as we can see this is simply a momentum trade in a small cap stock.
As to what’s done at MingZhu: “MingZhu Logistics Holdings Limited, through its subsidiaries, provides trucking services in the People’s Republic of China. It also provides car-hailing and driver management services, and car owner services. The company serves sizeable third-party logistics companies, freight forwarders, and warehouse operators, as well as other supply chain service providers.” There was also the addition of the liquor business over the summer. That is a sensible enough diversification into an adjacent business line.
MingZhu Logistics stock price from Google Finance
But there’s no news out there to explain this 86% leap. Market cap’s around the $12 million mark and there’s no registered short interest. But at that market cap it wouldn’t take much buying to trigger a cascading momentum trade. The problem there is that if we don’t know why the momentum trade has started then we don’t know when it’s going to end. For momentum trades always do end, it’s the price at which they do that has to be worried about. Without any substantial reason for the jump we simply have to therefore conclude that this is just one of those flurries.
These varied Chinese microcaps on Nasdaq. They can undoubtedly be fun to trade in their little rallies. But given that we almost never do know why they’ve rallied - other than just “buying” - it’s difficult to regard them as anything like investing - they’re far more akin to simple gambling.
