In an interview with CNBC, SEC Chairman Jay Clayton spoke about one phenomenon that the SEC doesn't directly regulate. Clayton calls it euphoria, and he says it happens when stocks run away. We're seeing that now with Wunong Net Technology stock.
Wunong began trading on the Nasdaq Exchange on Dec. 15 at $5.00 per share, but the value quickly skyrocketed. Here's why that forward momentum likely won't last.
What to know about the Wunong Net Technology IPO
Wunong stock was up 400 percent on the second day after its IPO and 763 percent by Friday. That's a massive speculative boost, and one that's likely to lead to serious losses for numerous investors. Large sell-offs will only make the stock careen downward, ultimately leaving remaining shareholders in the trenches.
Overall, the Wunong IPO was a valuable one. The company sold at least five million shares during the offering, earning a solid chunk of gross proceeds for themselves.
What does Wunong Net Technology offer?
Wunong sells a diverse array of food products through its e-commerce platform. The company is based in China, so it's not a big talking point for American consumers—that is, of course, until this wild ride of an IPO came to town.
How to buy Wunong Net Technology stock
The Wunong IPO came to a close on Dec. 17, meaning it's available for trading to the general public. The stock is trading under the ticker symbol "WNW" on the Nasdaq Exchange.
Investors can access Wunong stock through online brokerages like TD Ameritrade, Charles Schwab, Robinhood, and more. Options traders may be particularly interested in Wunong, especially considering the stocks speculative strength. Placing a put is a likely bet for many as the stock nears a 1,000 percent increase in mere days.
Wunong Net Technology's outlook
In an interview with CNBC, Jim Cramer said about the Wunong Net Technology IPO, "This is not what an orderly market looks like."
Clayton's point about euphoria really rings true here. Wunong is an inconspicuous company that's not like any domestic blue chip we know, love, and use. With a rise in retail investors since the start of the COVID-19 pandemic, it's possible that people are injecting capital into a business they haven't done their due diligence on.
Wunong stock opened at $92.71 on Dec. 18. That's 971.79 percent more than the stock's value at mid-morning just three days prior. With a bull run like this, a demise is inevitable. We're already seeing some semblance of it, too. In pre-market trading on Friday, Wunong fell 18 percent. In the grand scheme of things, that's not much—but it could be the start of something more noteworthy.
Wunong may not always be a conviction sell (as Goldman Sachs might've put it), but in the short period since its IPO, the company's strong upward curve is definitely a cause for concern. It's worth being wary around this fledgling stock, especially if you're unfamiliar with the Wunong's historic economic standing.