Shares of SOS Limited (SOS -7.28%) pulled back on Thursday. The stock had rallied the day before, and some traders hoped it was just the start of a bigger move. But yesterday's rally appears to already be fizzling out with SOS stock down 7% as of 1 p.m. EDT.
On Wednesday, the price of popular cryptocurrency Bitcoin was down, causing the stocks of Bitcoin miners to fall as well. These include companies like Marathon Digital Holdings, Riot Blockchain, and The9. SOS is usually part of this list. However, SOS stock skyrocketed 28% higher yesterday as a group on Reddit tried to spark a short squeeze.
The original Reddit post that rallied traders yesterday has reportedly already been deleted. This explains why SOS stock pulled back today. Under normal circumstances, the company's shares probably would have fallen yesterday.
SOS skyrockets yesterday and pulls back today. It sure can make you dizzy. Keep from running around in circles by setting your focus on a solid buy-and-hold investing strategy. When everyone else is just chasing the wind, you can rest on your long-term thesis.
Traders, on the other hand, will react to short-term events such as a company's financial reports, which will cause the stock to either go up or go down. It seems SOS shareholders are placing a lot of faith in something unproven. The company last updated investors in June 2020, when it provided full-year 2019 results. In 2019, its revenue fell 38% year over year, and net loss came in at almost $10 million.
With limited cash and ongoing losses, SOS has been funding its pivot to Bitcoin mining by issuing stock. It's been able to raise a lot of cash this way, including $125 million in its latest round. But shareholders need to hope its newer ventures create enough shareholder value to offset the ongoing dilution.