Top Financial Group (TOP): Is This GME All Over Again?
Key takeaways
- Reddit’s at it again — this time, it’s TOP Financial Group
- TOP’s share price rocketed up over 1,000%, then plummeted on Friday
- Yes, it’s hugely overpriced and it’s a great example of how investors can get burned with hyper-volatile individual stocks
Reddit was behind one of the biggest short squeeze booms of 2021, and now it’s creating yet another meme stock: TOP Financial Group. The popular subreddit WallStreetBets is all over this Hong Kong stock. Let’s find out why.
Rather than relying on Reddit’s DD, perhaps you’d like to invest in a little more than memes. You can still take advantage of short squeezes by using Q.ai’s Short Squeeze Kit. This Kit uses AI to take the guesswork out of your portfolio and finds stocks with the potential to pop.
Download Q.ai today for access to AI-powered investment strategies.
What is TOP?
TOP Financial Group (TOP) is an online brokerage business based in Hong Kong that aims to provide customers with “a one-stop investment service.” It went public in June 2022 as Zhong Yang Financial Group, before changing its name to TOP Financial Group in July 2022.
During Thursday trading, TOP’s share price rocketed over 1,000% in four hours. It sharply plummeted at open on Friday, but the stock was still trading 440% higher at close on Friday. So, what’s going on?
Why is Reddit interested in TOP?
First, a little Reddit backstory. In 2021, r/WallStreetBets grew angry at the state of affairs in the stock market. Institutions shorting stocks to push companies toward failure really lit a fire under Redditors, and the subreddit decided to take action.
Gamestop (GME) and AMC Entertainment (AMC) were just two of these heavily shorted stocks. Redditors decided to boost the GME and AMC share prices in the hopes of pushing some hedge funds toward ruin.
Well, it kinda worked. Melvin Capital Management lost $1 billion a day at the height of the GME push while Redditors raked in the cash. Ordinary people became millionaires.
Reddit hype led to GME’s stock price rising 1,738% in three weeks, with AMC seeing similar gains over six months. While AMC is pretty much back to where it started, GME remains 336% higher over two years later.
As a small company, TOP has just 2.56 million public shares. That might sound like a lot, but in the grand scheme of the stock markets, it’s really not. This means that any short interest and meme-stock hype can lead to quick bursts of gains and potential ruin for short-happy hedge funds.
The bottom line
As TOP’s meme stock gains will heavily rely on “diamond hands,” we could see a crash as Redditors cash in or chicken out. Such a small float means gains are volatile, in both directions.
TOP reported a net income of $1.84 million in September 2022 for the preceding six months. With its share price pushing its market cap into the billions, it’s hugely overpriced.
If handing it to hedge funds is your thing, discovering the best short squeezes might be a desirable investment strategy. With Q.ai’s AI-powered weekly rebalancing, you can find the most promising short squeezes every week with the Short Squeeze Kit.
Download Q.ai today for access to AI-powered investment strategies.
