Should I buy Koss shares? WSB sends KOSS 1700% higher

By: Stanko Iliev
Stanko Iliev
Stanko dedicates himself to providing investors with relevant information they can use to make investment decisions. He loves the… read more.
on Jan 31, 2021
  • Koss Corporation shares are trading over 1700% higher since the beginning of January
  • Koss Corporation is extremely overvalued at the current share price
  • Investors could have massive losses if they continue to hold Koss's stock

Koss Corporation (NASDAQ: KOSS) shares are trading over 1700% higher since the beginning of January, and if you decide to buy shares, you should use a “stop-loss” order because the risk is very high.

Fundamental analysis: Financial results certainly don’t justify the current share price

Koss Corporation shares have exploded since the beginning of January, and some analysts say that the community from the WallStreetBets forum influenced this price move. Koss Corporation is an American company that manufactures headphones, and according to analysts, the momentum in Koss’s stock is about to fade away in the following week.

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Koss Corporation reported Q2 results last week; total revenue has increased by 18.5% Y/Y to $4.93M while Q2 GAAP EPS was $0.07. “The increase in net sales for the quarter and first six months has been across several markets with US distributors, European distributors, and domestic direct to consumer sales leading the way,” said Chairman and CEO Michael J. Koss.

There is no other reasonable explanation for this jump, and financial results certainly don’t justify the current share price. My opinion is that investors could have massive losses if they continue to hold Koss’s stock at the current level because the company is extremely overvalued.

The SEC has already promised to protect real investors, and one thing SEC could do is impose heavier regulations on margin trading.

“We will act to protect retail investors when the facts demonstrate abusive or manipulative trading activity that is prohibited by the federal securities laws. Market participants should be careful to avoid such activity. Likewise, issuers must ensure compliance with the federal securities laws for any contemplated offers or sales of their own securities,” SEC reported.

Robinhood currently has a list of 50 equities where buying shares and options contracts are limited, and it is important to say that Koss Corporation shares have their place on this list. This Sunday, Interactive Brokers sent an email to clients explaining that the trading of AMC, BB, EXPR, GME, and KOSS was open again.

Technical analysis: Koss shares are trading over 1700% higher since the beginning of January

Koss Corporation shares have advanced from $3.6 above $160 last trading week, and the current price stands around $63.

Data source: tradingview.com

The critical support levels are $40 and $20; $80 and $100 represent the resistance levels. If the price jumps again above $80, it would be a signal to trade shares, and the next target could be around $90 or even $100.

On the other side, if the price falls below the $40 support level, it would be a firm “sell” signal and probably a trend reversal sign.

Summary

Koss Corporation shares have advanced from $3.6 above $160 last trading week, and the current price stands around $63. Koss Corporation shares could increase above the current price, but the risk/reward ratio is not good for long-term investors.

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