What happened
Shares of Missfresh Limited (MF -19.43%), a Chinese fresh-food retailer, were soaring today even though there was no news out on the stock. Instead, the movement looked like a short squeeze or a possible case of mistaken identity as a non-fungible token (NFT) with the same ticker launched today.
As of 2:48 p.m. ET on Wednesday, the stock was up 28.1%.
Image source: Getty Images.
So what
More than 36 million Missfresh shares had changed hands by this afternoon, compared to an average trading volume of just 932,000, an indicator that a short squeeze was causing the surge.
However, according to several news outlets, only 2 million shares of the stock are held short, meaning that instead of a short squeeze, this could be a brief momentum rally among day traders who noticed the stock was soaring after it climbed 14% yesterday.
The most recent piece of news out on Missfresh was that fourth-quarter sales of its private-label product Fresh Joy jumped 300% in the first quarter from a year ago, but the stock actually plunged last week when the company announced that news.
The other potential driver of the stock's gains today was that traders might have confused it with the NFT token MetaFighter, which was set to hold an initial offering under the ticker MF, the same as Missfresh.
Now what
Missfresh is a penny stock trading at less than $2, and those stocks tend to attract day traders and speculators looking to make a quick score. As a small-cap Chinese stock, it's also been hit hard over the last year on concerns about delisting and a crackdown from the Chinese government. It's still down 83% after the last year, even with its gains over the last two days.
Today's jump is also a reminder that stocks don't always move for a clear reason, and as a small-cap Chinese penny stock, Missfresh fits the profile of a stock likely to attract manipulation from day traders.
