Yunhong CTI Ltd. (CTIB) stock prices were up by 11.78% as of the market closing on July 13th, 2021, bringing the price per share of USD$2.61. Subsequent premarket fluctuations have seen the stock rise by 24.52%, bringing it up to USD$3.25.
Year-over-Year Improvements
May 26th, 2021 saw the company announce a highly promising 17% year-over-year increase across the entirety of its Mother’s Day specific product categories for 2021. Despite the continued effects of the ongoing global pandemic, the company’s reports signify the quality and reliability of the company’s product portfolio. The company’s ability to ramp up production capacity to cater to the increased demand was also made apparent, signaling a strong start to the 2021 year.
Volume of Shares Traded
The company saw a massive surge of the volume of shares traded in a very short period of time, from a few dozen thousand up to a peak of more than 1 million over the course of a day. With there being no evidence to suggest that there have been developments that have not yet been covered by the media, this movement happened too rapidly for the stock to have snowballed after gaining organic momentum with day traders.
Contextualizing CTIB’s Volatility
Instead, in the absence of significant developments or changes in fundamentals, it is highly likely that the company has become the latest target in the raging meme stock phenomenon that has been spreading like wildfire across the stock markets. The pumping and inflating of the equity value of underperforming companies goes as far as to see companies heading towards bankruptcy being resuscitated, however temporarily, from the brink of collapse.
Meme Stock Phenomenon
A high short interest seems to be a common prerequisite for stocks being targeted by the meme stock movement, with the short interest signaling institutional investors’ confidence in the company’s stock price falling. Accordingly, the execution of a collaborative short squeeze is coordinated by retail investors who seek to capitalize on the confidence of institutional investors. Historically, some of the biggest names on Wall Street have seen losses in the billions, with some going as far as succumbing to bankruptcy. Given the randomness of the motivation behind these meme stocks, the gains in stock prices are rife with inherent volatility and risk.
Future Outlook for CTIB
Nevertheless, armed with the fortuitous surge in equity value, CTIB is poised to capitalize on the opportunities afforded to it as a result of the increased limelight the company is finding itself in. Current and potential investors are hopeful that management will be able to leverage their resources to facilitate sustained organic growth without the recent volatility.
