Shares of MicroAlgo Inc. (NASDAQ: MLGO) soared by 13.2% to $12.15 during Tuesday’s trading session, extending its recent volatile rally. The stock, which has gained a staggering 400% over the past five sessions, is trending widely across social media platforms, driving significant speculative interest.
Share Issuance to Fulfill Convertible Bond Agreement
On Monday, MicroAlgo announced plans to issue new shares to fulfill its $20 million convertible bond agreement, which was signed on October 7, 2024. The bonds, maturing in 360 days, include a provision allowing conversion into common shares at 70% of the lowest closing price over the previous 60 trading days.
In accordance with the agreement, creditors have formally requested share issuance at $0.80 per share to settle the outstanding debt. MicroAlgo confirmed that it will proceed with the issuance as stipulated in the bond terms.
Market Reaction and Volatility
The news triggered a surge in trading activity and further amplified volatility. MicroAlgo, which has a 52-week high of $509.60 and a low of $1.11, has been on a rollercoaster ride. The sharp gains over the past week have fueled speculation, with retail traders and social media enthusiasts driving much of the momentum.
What’s Driving the Hype?
The stock’s recent spike is largely attributed to its viral popularity on platforms like X (formerly Twitter), Reddit’s WallStreetBets, and Discord groups. The speculative buying frenzy resembles previous meme stock surges, with retail traders piling in despite the dilution risks associated with the new share issuance.
How to Buy MLGO Stock
For investors looking to trade MLGO, shares can be purchased through most brokerage platforms. Many brokers offer the option to buy fractional shares, allowing investors to own a portion of a stock without purchasing a full share.
For those considering bearish bets against the stock, short-selling or options strategies can be employed.
- Shorting the stock: This involves borrowing shares to sell at the current price, with the goal of buying them back at a lower price.
- Options trading: Investors can either buy a put option (betting on a decline) or sell a call option with a strike price above the current level, aiming to profit from the stock’s potential drop.
Looking Ahead
While MicroAlgo’s recent run has been extraordinary, the upcoming share issuance could introduce selling pressure, given the potential dilution. Investors should remain cautious of the volatile price swings and the risks tied to speculative momentum.
Nonetheless, with continued social media attention and ongoing bond-related developments, MLGO is likely to remain on traders’ radars in the near term.
