What’s happening with the Top Financial stock price?

Top Financial (NASDAQ: TOP) stock price went parabolic on Friday as American equities continued their bull run. Shares of the meme stock soared to a high of $7.75, its highest point since July 2023. It then pulled back and closed at $5.50, which was 100% above its lowest point this month, making it one of the top-performing companies. Its market cap has surged to over $188 million.

TOP’s volume jumped

Top Financial’s surge was accompanied by strong volumes. Data compiled by Yahoo Finance shows that over 72 million shares exchanged hands on Friday. This was a strong figure since the average volume for the stock stands at less than 1.4 million.

Interestingly, this surge happened on a day that the company published no news. This means that the increase was likely a short-squeeze since the company has a short interest of almost 6%. These squeezes are getting more popular now that American equities are in a strong bull run. For example, some of the other companies to go through a short squeeze recently are Bakkt, Tellurian, and Beyond Meat.

Top Financial stock also likely jumped as the Chinese New Year started. In most cases, stocks and other Chinese assets tend to be volatile during this period.

For starters, Top Financial is a Hong Kong-based company that provides a platform where people can buy and sell local and international assets. It has a connection to most markets around the world, including in the United States and Mainland China.

As a result, Top Financial has been going through a difficult period as Chinese stocks plunged this year. This trend has been offset by the rising demand for foreign stocks as US equities jump to their record highs.

Top Financial stock chart

Top Financial is risky

However, experts warn that buying and holding Top Financial is a risky move because much of its operations are not known well. And unlike American companies, it does not publish its quarterly financial performance. It only releases its annual reports. 

Its most recent report showed that its revenue came in at $9.7 million in the last financial year, an improvement from the previous year’s $7.8 million. It had $16.9 million in revenue in 2021.

Further, Top Financial also has a highly complicated corporate structure. The company has stakes in 9 subsidiaries directly. These subsidiaries then own other companies, making it a difficult web of structure. Most of these companies are registered at the British Virgin Islands.

Therefore, I suspect that Top Financial will continue being volatile in the coming weeks because its fundamentals are still weak. The only caveat is that a major short-squeeze, as we saw on Friday is also possible, making it highly risky to short the company.