What happened
Shares of Society Pass (SOPA +5.46%) were pulling back today after the Southeast Asian e-commerce stock went on a dramatic run last week when it was added to the Russell 2000 index, giving investors confidence in its future.
After a whopping gain of 382% last week in what appeared to be a short squeeze, the stock was trading down 13.6% as of 1:05 p.m. ET, a sign investors believe the stock was overbought last week.
Image source: Society Pass.
So what
There was no company-specific news out on Society Pass over the weekend. The company made a pair of 13G filings with the Securities and Exchange Commission after hours Thursday, indicating that CEO Dennis Nguyen and CFO Raynauld Liang each own more than 5% of shares outstanding. But those filings did not indicate a change in their ownership, so there's no reason to think that would have affected the stock price.
The holiday shopping season, normally the busiest time of year for retailers, is officially in the books now, but it's unclear if holiday sales were better than normal in Southeast Asia. The company did post on social media about finding deals after Christmas as its value proposition is built on customers saving money.
Still, the best explanation for the stock's slide today seems to be that the incredible volatility in Society Pass stock remains. The price has ranged from $3 to $77 since it went public in November as traders and shorts have plowed into the stock.
Now what
As a company, Society Pass is promising big things and is competing in a fast-growing market, as the success of Sea Limited has shown. However, Society Pass earned just $83,534 in its most recent quarter. The company has made a number of acquisitions this year that are expected to fuel its growth, but currently the stock is highly speculative.
Given that, investors should expect the volatility to remain as there is little in the way of fundamentals to support its current valuation.
