The Koss stock price has almost halved in the last 2 weeks. Although the latest squeeze may have paused, could it return with a vengeance?
Shares in earphone-maker Koss Corp have struggled to hold on to last month’s gains. Koss (KOSS:NYSE) finished the day at $23.20, down -$1.21 (-4.96%).
After hitting a 5-month high of $43.92 earlier this month, KOSS has closed lower on 8 out of the following 10 days.
However, for some context, the Koss stock price is still 560% higher than it was on January 4th.
The stock spent much of 2020 below $3.00 per share. However, in January, a four-day, face-melting rally sent KOSS higher by 3,300% to $127.34
Anyone with even a slight interest in the stock market will undoubtedly be aware of this year’s biggest trading event: The rise of the retail trader.
Reddit’s ‘Wallstreetbets’ investing forum noticed that institutional investors (think hedge funds, Banks, etc.) had built large short exposure to a handful of depressed stocks.
KOSS joined Gamestop and AMC Entertainment in what became a historic event for the stock market.
The Koss stock price exploded higher beyond all valuation metrics as institutions scrambled to cover their short positions.
Since January, KOSS has calmed down but remains historically high in valuation and prone to sudden bursts of volatility. The current market cap of around $192 million put its P/E ratio at a mind-boggling 483.30.
This leaves investors in a quandary. The price is clearly over-valued; nonetheless, selling is a dangerous game. Institutions lost billions of dollars being short of meme-stocks during January’s melt-up.
One take-away from 2021 is that asset values are subjective. Investors must now add a new variable into their spreadsheet. The percentage of available shares that have been sold short is now a major factor in predicting stock prices.
Anybody claiming to have a Koss stock price prediction is a braver man than me. You could argue, the stock is trading 10x more than it should be. Regardless, I still wouldn’t sell.
Does that mean, that KOSS is worth buying?
With 21.48% of the available float lent to short-sellers, there could easily be more fireworks ahead.
But my advice would be to watch this one out, as there could be several losers for every winner.
If that’s your game, Las Vegas has recently lifted all lockdown restrictions.
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