The Arbe Robotics Ltd (NASDAQ: ARBE) stock price spiked 76.8% despite the lack of news from the company that makes radar detection systems that allow drivers to identify and avoid hitting other road users via 4D imaging. The Israeli company did not make any announcements today.
YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY.
The lack of news from the company indicates that today’s rally was primarily fueled by the buying pressure created by the over 7.6 million ARBE shares that had changed hands at the time of writing as investors piled into the company.
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YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY
Arbe Robotics is not the typical penny stock, given that its shares were trading at $4.35 at the close yesterday before soaring past $7.50 during premarket trading. The company also has a market valuation of $274.66 million, which is decent.
Still, today’s rally could result from a pump-and-dump campaign by investors who want to offload some of their shares by convincing other investors to buy them while they are busy selling. While many might assume that such schemes are always perpetrated by shady individuals online, this could not be further from the truth.
Most investment banks engage in similar activities where they will buy a stake in a company and then discuss it in a positive light on mainstream financial media to get others also to buy the stock, triggering a rally in the stock and making them a profit.
The same is true of short-selling reports. The research firms that produce such reports also short the companies they are covering to profit from the decline in the company’s stock price as other investors sell their stakes in the firm based on the short-selling report.
Therefore, it is always advisable to avoid buying shares in a company whose stock has spiked higher without any fundamental triggers, which could indicate that someone might be pushing the share price higher.
Furthermore, such drastic rallies, even when some news releases accompany them, tend to be followed by significant declines as early investors take profits from their positions. In contrast, others get trapped, having bought at much higher prices.
*This is not investment advice.
Arbe Robotics' stock price.
The Arbe Robotics stock price spiked 76.78% higher to trade at $7.69, from Monday’s closing price of $4.35.
YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY.