Troika Media Group stock: is TRKA a good bargain or a value trap?

on May 12, 2023
  • Troika Media stock price has been in a steep sell-off in the past few months.
  • The company will publish its financial results on May 23rd.
  • While the trend is bearish, a short-squeeze cannot be ruled out.

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Troika Media Group (NASDAQ: TRKA) stock price has been in a deep sell-off in the past few months and is now trading at the lowest point since March 24. It has plunged by more than 82% from the highest point this year. Even so, data compiled by Yahoo Finance shows that the shares are up by more than 51% this year.

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Is Troika Media Group a good investment?

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Troika Media Group has become one of the most popular meme stocks this year. The shares are constantly in the most active tab of StockTwits, a social media platform for traders. It is also highly popular among Reddit traders

Its Yahoo Finance conversations has over 22,000 comments, which is high for a penny stock valued at about $61 million. One reason for the recent sell-off is the increased dilution of the company. Data compiled by SeekingAlpha shows that the number of outstanding shares rose from 15 million in December 2021 to over 80 million.

Most recently, the outstanding shares jumped after a creditor decided to exercise warrants to buy hundreds of millions of additional shares. Dilution is often seen as one of the biggest risks in the stock market since it devalues existing shareholders.

Another likely reason why the Troika Media Group stock has become popular is its growing revenue. Annual revenue jumped to $116 million in 2022 from the previous $16.2 million. This happened because of the decision by the company to acquire Converge. The net loss jumped to $38 million,

The next key catalyst for the TRKA stock price will be the company’s earnings that are scheduled for May 23rd. While Troika is a risky company, there is a likelihood that it will see increased market activity ahead of this date. We can’t also rule out a potential short-squeeze before and after the report.

Troika Media stock forecast

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Troika Media Group

TRKA share price has crashed below $0.20, making it cheap on face value. The shares have moved below all moving averages and have moved below the key support at $0.20. They remain below the 50-day moving average while the RSI is nearing the oversold level. It is also nearing the key support level at $0.17, the lowest point in March this year. 

Therefore, while the overall trend is bearish, a short squeeze can’t be ruled out. As such, I recommend against shorting the company for now. In the long term, I suspect that the shares will continue falling, with the next target being at $0.093 (December low).


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