At the conclusion of the may 28 trading day the explosively volatile daily coupon site LiveDeal (LIVE) experienced a massive 33 percent upswing despite any discernible positive news. Like Plug Power (PLUG) in early 2014, LIVE has become the tech play du jour for daytraders, and at this point it’s safe to say its whipsaw action has absolutely nothing to do with fundamentals, and everything to do with hyper-speculation.
Buy! Sell! Buy! Sell!
If one were to try to predict the price movement of LIVE going forward, the safest bet wouldn’t be up or down, but just “extreme.” When it comes to fundamentals, LIVE is a wash: the company continually loses money, has benefited from dodgy PR more than actual votes of confidence from experts, and maintains a consensus rating of “sell” from analysts. But that hasn’t stopped it from surging up the charts in late May.
The pop can likely be attributed to retail investors that have bought into LIVE’s aggressive PR shilling. And on top of that, more savvy investors riding on the coattails of growth spurred by these investors. That is, the type of buyers who recognize this is a purely speculation-driven growth wave, and thus unsustainable. Matters not that it appears the company is trying to dilute shareholders as much as possible. The growth wave is cresting, so grab your surfboard and hop on.
It’s all quite reminiscent of what happened to fuel cell manufacturer PLUG in February and March of this year. Bullish reports and a sudden foray into profitability gave way to investor bearishness, which gave way to retail speculation, which gave way to short-seller Citron Research issuing a hit piece on the company.
With LiveDeal, Unpredictability is the Only Sure Thing
The one clear story to be taken from PLUG’s stock movement is that battleground stocks are erratic as the day is long. Much as Plug experienced extreme unpredictability at the beginning of the year, LIVE is currently seeing swings that defy logic. The downtrend of the last few months, which made sense for a company who had become wildly overvalued, has been reversed, and then re-relaized, and the re-reversed, all on no news save paid-for advertorials by Stock Media Group.
LIVE’s shares have experienced ten times normal volume regularly over the last week, as investors have scurried to attempt to realize profits on the now-regular dips and the bounces. And looking in the near future, they will no doubt continue to do so for the inevitable correction that will most likely follow the day’s big upswing.
The pattern with LIVE, of significant ups and downs, will continue just as PLUG’s did for some time. That is, the whipsaw action will continue until daytraders find the next LIVE.
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