Universe Pharmaceuticals Inc (NASDAQ: UPC) is screaming for the top in the market this morning, but with no news out, many are wondering why. The fact is that with no news, anything said here is speculation. However, I believe the following to be the reason for the run:
Why Universe Pharmaceuticals Is Rocketing
As mentioned above, Universe Pharmaceuticals is finding its way to the top in the market this morning, but the company hasn’t issued any news via press release or SEC filing. So, what’s the deal?
The gains seem to be the result of a mix of factors, including:
- Sympathy. Some of what’s moving the stock up could be a sympathy play. Recently, there has been quite a bit of interest among investors in Chinese pharma stocks. In fact, this morning, China Pharma Holdings is rocketing following a financial release. Investors are looking for these types of opportunities, and the stock fits the bill.
- IPO. Just last week, Universe Pharmaceuticals announced the closing of its IPO, which included the sale of 5 million shares at an initial price of $5 per share. IPOs have been hot topics so far in 2021, and the fact that the offering went off without a hitch is a point of excitement for investors.
- Low Float. The community on the Wall Street Bets Reddit, as well as newly-named Robinhood traders, are consistently looking for stocks with low floats that have interest from the investing community. That’s exactly what Universe Pharmaceuticals is. With such a low float, the supply of shares is minimal, making it easy for a group of retail investors to send the stock screaming for the top.
There May Be More Room Ahead
Considering the fact that Universe Pharmaceuticals has such a tiny float, the gains we’re seeing out of the stock could be nothing more than the beginning. The fact of the matter is that tiny floats create supply and demand imbalances when investors dive in, which could lead to gains in multiples, far and beyond what we’ve seen from the stock so far this morning.
The bottom line here is simple. Investors are excited about IPOs, Chinese stocks, and stocks with low floats, and that excitement is increasing. Moreover, Universe Pharmaceuticals stock hits all of those nails on the head.
All told, the gains so far are exciting, but they may just be the tip of the iceberg, making UPC stock one to watch closely.