Shares of Kaixin Auto Holdings (KXIN) has popped a whopping 875% this week, however there wasn’t any news indicating a massive run like this. Here’s why it ran so high this week.
Recently, there is been a bit of debate about Warrants and Preferred Shares being exchanged on the OTC. Many have posted messages on message boards indicating that the stock will be delisted from major exchanges, doomed to trade on the OTC.
KXIN is not, however, the only firm to position OTC guarantees or favorite shares. These are also not yet listed in major exchanges, but this doesn’t have anything to do with common equities. Currently, the stock will be de-listed from a major exchange.
That seems to have begun to become clear to investors. At the same time, the stock has fallen over a year, with unbelievable trade downs. There was also a short-interest boat load. Combine all this with a very little public float and bam … you’ve got a fast squeeze recipe.
As shorts begun to cover and the stock ticked up, it created a revolving door of shorts covering and others buying in. This seemed to have triggered the trading bots, with algo trading leading to even more dramatic gains.