LI meme stock Paltalk goes wild as social media posts generate interest
The action of a Long Island video chat app maker is taking risk-indulgent investors into a wild ride, fueled in part by cheerleaders on social media sites for stock traders.
Shares of Jericho-based Paltalk Inc. rose 3% to close at $ 8.98 on Thursday, in a volatile three-week period.
âCmon my pumps are working overtime haha ââI need it higher,â OneWolfCapital told the Stocktwits website on Wednesday. âReady for the next rip at $ 20 and up,â said another poster, TargasMum.
David Sacco, who teaches finance at New Haven University, said Paltalk and other âmemeâ stocks represent a shift in the dynamics of Wall Street.
âIt’s a different generation,â he said of investors who frequent stock exchange discussion forums. “They are video players. They play a bit.”
Traditional investors assess the value of stocks based on price-to-earnings ratios, future cash flows, and other comparative financial metrics of the underlying company.
Those data points, however, carry little weight to the meme stock crowd, Sacco said. “There is a whole new part of the investing world that doesn’t care about fundamentals.”
Paltalk President and CEO Jason Katz did not respond to requests for comment.
Twelve months ago Paltalk shares were in the doldrums, trading below a dollar.
At the end of September, however, it began a meteoric rise. On September 23, the stock closed at $ 2.93 with a volume of around 16,000 shares, and at the end of the month the closing price more than tripled to $ 10.57 and the volume climbed to over 99,000.
The trend in stocks itself is marked by individual “retail” investors banding together on social media to drive up company stocks.
The phenomenon gained momentum during the COVID-19 pandemic when housebound investors found themselves with time to follow the stock market.
Mitchell Goldberg, chairman of Melville’s investment firm ClientFirst Strategy Inc., said investors should exercise caution.
“Every time you buy stocks based on conversations on Reddit [a popular online bulletin board], it’s really worth your play money, âhe said.
In August, Paltalk moved its listing from the over-the-counter markets to the better-known Nasdaq Capital Market and listed 1.16 million shares in a $ 3 share offering.
In September, the company announced that it was hiring Clear Think Capital to refine its communications with potential investors.
During the quarter ended June 30, Paltalk reported net income of $ 822,000 on sales of $ 3.4 million. This compares to net income of $ 532,000 on revenue of $ 3.4 million in quarter 2020.
Paltalk hosts video chat communities through its Paltalk and Camfrog products, which are available in over 180 countries on Windows, Mac OS, iOS, Android and other devices.
In 2020, the company released board games, including poker, blackjack, bridge, and chess, which allow users to play via video chat in real time.
Overall, users are around one-third domestic and two-thirds international, the company said in its annual report.
In March, the company had 22 employees.