OCG Stock: Oriental Culture IPO Excites Investors

Oriental Culture Holdings Ltd. (NASDAQ: OCG) is rocketing on its second trading session on the Nasdaq, making this one of the many incredibly successful IPOs of 2020. 

While the company hasn’t issued any news today, there’s good reason for the excitement. Here’s what’s going on with OCG stock:

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The OCG IPO Is an Exciting One

The Oriental Culture Holdings IPO hit the market yesterday, and it was an overwhelmingly successful one. 

Recently, the company said that it would sell 5,065,000 shares of common stock at a price of $4 per share. The IPO was priced to bring $20.26 million through the doors before deducting underwriting and other offering expenses. 

The IPO went off without a hitch. In fact, while the pricing of the IPO came in at $4 per share, the stock closed at $6.10 per share after more than 50% gains. However, those gains clearly didn’t stop. 

More Dramatic Gains Send OCG Stock up in the Premarket

In the premarket hours, OCG stock is seeing incredible volume and price appreciation this morning. In fact, it’s easier to explain the gains in multiples, rather than percentages. 

With investors seeing several successful IPOs throughout 2020, and the stock headed up in the market yesterday for its IPO, OCG is a hot ticket item on Wall Street today. 

Why Investors Are So Excited

There’s good reason for the excitement surrounding Oriental Culture Holdings. First and foremost, as mentioned above, investors have watched several successful IPOs this year, and FOMO is a heavy burden to hold. 

Due to the fear of missing out, and the fact that OCG stock was screaming for the top in the market yesterday, investors are piling in at an alarming rate. However, that’s not the only reason for the excitement. 

Ultimately, investors seem to be gauging the implications associated with a coming Biden Presidency. For the past few years, the United States and China have been in the midst of a trade war, led by President Trump. 

This trade war has led to tariffs that ultimately resulted in economic pain for China. However, that’s likely to change relatively soon. 

Joe Biden recently won the United States Presidential Election. As the leader of the world’s largest economy, and the free world, Joe Biden plans on reversing quite a bit of what Donald Trump did as President. One of the major reversals will likely have to do with global trade. 

That bodes well for any Chinese company, including OCG. 

Ultimately, if Biden does reverse what Trump did in terms of global trade, the Chinese economy will go back to benefiting from the demand for their low-cost products from the United States. Ultimately, a relaxed trade war would lead to stronger sales for Chinese companies, helping to prop up the Chinese economy. Considering this, Chinese stocks have been hot. 

So, what we have here is a double-edged sword. 

Investors are seeing opportunity in IPOs in general, with many being overwhelmingly successful. With OCG stock making a dramatic run for the top yesterday, FOMO is becoming too hard to hold back for many investors, leading to a flood into the stock for the first edge of the sword. 

On the other side of the sword, we have an incoming Biden Administration that will likely make big changes to global trade, assisting the Chinese economy in the process. With Oriental Culture Holdings being a Chinese Company, it will be a direct beneficiary of moves made by the Biden Administration. 

Risks to Consider Before Buying OCG Stock

Any time you make the decision to purchase a stock, you’re accepting risk. The fact of the matter is that there is no such thing as an investment that comes without risk. When it comes to OCG stock, some of the most significant risks to consider include:

  • Immediate Overvaluation. The IPO price that OCG launched at made a lot of sense. However, the excitement of investors has sent the stock soaring. At these levels, it is clearly overvalued, and at some point, investors will take profits. So, buying in now could lead to significant losses. 
  • Speculation. Much of the excitement around Oriential Culture Holdings stock, and other Chinese stocks, has to do with an incoming Biden Administration and what the Administration may do in terms of global trade. Because these moves haven’t been announced, this is largely speculation. Should investor expectations due to this heavy speculation not come to fruition, significant losses could be the result. 
  • Penny Stock Risks. OCG stock is a penny stock. That means that the stock will experience heavy levels of volatility. Moreover, there are other risks to consider with Oriental Culture Holdings that are in line with general penny stock risks, such as lack of profitability and the potential for dilution ahead. 

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Final Thoughts

In my view, OCG stock may be a strong opportunity down the line. However, if you’re thinking about jumping in right now, you may want to reconsider. 

Unfortunately, the investor excitement has pushed the stock to incredibly high valuations and I fear that there are going to be several bag holders once profit taking commences. 

All in all, OCG may be a great investment opportunity following the profit taking activities that are all but guaranteed ahead. Nonetheless, it’s not a good idea to accept the risks at current levels. That is, unless you like throwing money in the trash.