Reddit-Fueled Penny Stock's 6,400% Rally Reversing In Sydney

An anonymous reader quotes a report from Bloomberg: IOUpay, a fintech firm that went into overdrive on a social media-backed retail trading frenzy, has plummeted in the past two months. The stock is set for more declines as the firm's newly launched buy-now-pay-later services -- which allows customers to purchase goods and then pay for them in installments -- faces intensified competition in Southeast Asia from larger Australian rival Afterpay, say analysts. IOUpay had drawn comparisons to U.S. videogame retailer GameStop after surging 6,400% in the past year as it has been the subject of several discussion threads on Reddit. The Reddit-fueled day-trading crowd turned the first quarter of 2021 into one of the wildest periods of stock market frenzy in modern history. Despite a more than 40% slump since mid-February, IOUpay remains Asia's top-performing interactive media and services stock over the past year.

The wild ride by IOUpay, which lists Standard Chartered Plc and Citigroup as its clients, began in June after it was touted by investors on Reddit. Its shares continued gaining on a "buy now, pay later" deal with Malaysian online marketplace Easystore. That partnership inked in February sparked a more than 200% rally in its stock over a three-day period. "We may see the price subdued for a long period of time as retail investors get bored waiting and sell out to find something more exciting," said Carl Capolingua, an analyst at online brokerage ThinkMarkets Australia. "The question will be if they can get traction in the Asian markets they're targeting before the bigger players come in."

Did reddit fuel this?

[OrangeTide]

Or did a bunch of people who are easily influenced by Reddit posts do this?

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[LenKagetsu]

Well I never heard about it or saw anything about it on reddit, it's more likely they paid for an ad campaign to try and cover up insider trading and lying.

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[OrangeTide]

I'm on Reddit, but it's pretty big and I haven't read everything yet.

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[youngone]

I won't spoil the ending for you then

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[OrangeTide]

Can't be worse than GoT.

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[Nrrqshrr]

Or just get a couple of bots to spam threads and upvote posts and, bam, now you have "Reddit" on your side.

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[burtosis]

For all the GME hype retail held under 15% of stock or less at all times. Reddit is just the loudest with the dankest memes.

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[imidan]

Just a run-of-the-mill pump-and-dump. The forum doesn't matter. Buy a zillion shares of a penny stock, get a bunch of gambling-addicted market players together, spread rumors about the stock's secret undervaluing, and once the rampant speculative buying reaches a fever pitch, sell your zillion shares for a few cents more than you bought them. A zillion times two cents is two zillion cents.

Buy now pay later is a old trick.

[Kernel Kurtz]

These are just updated for the online age.

Be sure to read the stuff in tiny fonts before you click. They are not in your best interest now anymore than they ever were.

Stocks can go down too!

[Fly Swatter]

Sometimes back to their previous value. News at 11.

Not an empty pump

[z0idberg]

"Despite a more than 40% slump since mid-February,"

IOU was far from alone in a fall in share price from Mid-Feb. Afterpay itself had a high of ~$160 in mid February and fell 37% by end of March. Currently back up around $120 (which is still 25% down from $160).
Other BNPL companies followed exactly the same pattern through that period (e.g. Z1P , SZL).

IOU is far from an empty pump, see below - they have a Malaysia Money Lending License already, which is required to lend within Malaysia. As far as I know Afte

Re:Not an empty pump

[Fly Swatter]

FYI, a year ago this was a $0.0060 stock, now valued at $0.3850. Percentage increase looks impressive but the Summary conveniently leaves out real numbers. Good luck.

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[eaglesrule]

What's the difference between 100 shares with a value of $1 and one share with a value of $100, if both increase in value by %100 by the time you sell them?

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[burtosis]

The volume available and the impact of selling. So it doesn’t for small amounts of investment money like thousands or tens of thousands of dollars. But if your trades are too big a percentage of that shares trading volume then it’s going to move the price or limit the amount of the transaction.

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[eaglesrule]

I don't think the parent post had the actual liquidity of the stock in mind when dismissing the percentage gains, just to point out where the decimal points are.

I also can set a sell price and not just sell the entire position at whatever market price is at that particular moment.

My point is if I have 1k invested and the buy in point was .0060, and I can make my selling point around .3850 a year later, then I would be so lucky if my other 1k investments that aren't penny stocks had that kind of percentage g

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[burtosis]

Sure, there is always conflation between share price and total share valuation to people new at finance. I’ve always found it odd how there is an almost unwritten gut reaction to issue enough shares with an expected valuation so that the dollar amount per share “feels right”. GME bottomed our at like 0.20 iirc and peaked near 500. Tesla also exploded from an already high share price, though by % it’s much lower. So while the smaller companies are statistically more volatile and

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[colinwb]

None, except that on the UK stock market (at least) it used to be a thing - and apparently still might be - that a sufficient number of investors thought that a smaller price per share was a *good thing* that companies used to split their shares to reduce the price per share, allegedly to increase their liquidity. From my point of view the only practical effect of this was to make it more complicated to calculate the capital gain for tax purposes in the three months I spent working on a special project for

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[Anonymous Coward]

FYI, a year ago this was a $0.0060 stock, now valued at $0.3850. Percentage increase looks impressive but the Summary conveniently leaves out real numbers. Good luck.

If you think those "real numbers" are important, I highly recommend getting someone else to manage your investing.

That headline gave me cancer.

[BAReFO0t]

I hope you have insurance. I will be suing for damages.