For the week, shares of the Hong Kong-based Magic Empire Global Limited (MEGL -8.99%) traded nearly 30% down as of 12:05 p.m. ET Thursday, according to data provided by S&P Global Market Intelligence.
There is no apparent reason behind the move other than the continued volatility that the stock has become accustomed to since going public earlier this month.
Magic Empire Global is one of several Hong Kong stocks this year that has gone public and seen violent price swings.
Magic Empire Global sold 5 million shares for $4 each in a small initial public offering. But then retail traders apparently grabbed hold of the stock and drove it all the way up to $235 per share briefly. The stock has a public float of about 7.4 million shares.
Since then the stock has come crashing down and is now back down around $9 per share, which is still a big gain in a short period from the listing price.
Clearly, Magic Empire does not have the financials to support such a large move. Last year, the company generated a profit of $203,000 on revenue of nearly $2.2 million.
Fintech company AMTD Digital is another Hong Kong company that saw wild volatility when it went public in July. The company listed shares for $7.80 and saw them balloon all the way to more than an astounding $2,521 per share.
In recent years, retail traders have found ways to manipulate the trading of many stocks with low floats, or if they could get a large group to rally around a certain stock.
But stocks that move like this are likely going to be incredibly overvalued and very volatile. Although Magic Empire Global is down significantly from its high, I would still advise staying away from this one.