What happened
Shares of SGOCO Group (SGOC 3.77%) were up as much as 196% Monday morning as retail investors piled into this penny stock. The Hong Kong company's stock was up 172.2% at 11:47 a.m. EDT and is now up a whopping 917% in the last five trading days.
So what
On Friday of last week, SGOCO Group stock went up 500% on no news or analyst reports. Historically, SGOCO Group's 10-day trading volume was much less than 1 million shares. Today alone it changed hands 59 million times before noon EDT. The rise on Friday spurred interest from traders on Reddit, Stocktwits, and Twitter who have propped up stocks like GameStop (GME 2.84%) and AMC Entertainment Holdings (AMC 3.67%) for some time this year. It is unclear why shares of SGOCO Group went up last week, but all indications are that it is retail demand driving up the stock on Monday.
Image source: Getty Images.
As of this writing, SGOCO Group has a market cap of close to $2.5 billion. Its underlying business is not nearly as large. In 2020 it did $4 million in revenue, had a negative gross profit, and has reported an operating loss each year since 2016.
Now what
With Reddit traders fixed on SGOCO Group, long-term investors should stay far, far away from the stock. It already was a penny stock without much of an underlying business, which is enough for any savvy investor to stay away. Add on that it has now become a "meme stock" and investing in SGOCO Group looks downright dangerous.
