King Digital Entertainment PLC (NYSE: KING) seems to be running on up and up, and shares are back near a post-IPO high. Monday’s gain was massive, up at 14.5% at $20.45 in late-day trading.
The question to ask is what to make of this latest move. It isn’t a just a volatility alert. This is now a serious volume spike alert!
Investors have made money betting on Zynga Inc. (NASDAQ: ZNGA), but only if they caught the bottom around $2.75 or so. That stock is now at $3.23, but its stock briefly went to $14 in early 2012 after its IPO. Let’s just say it has been a rough ride ever since – with 2013 sales falling to $873 million from $1.28 billion in 2012 and $1.14 billion in 2011.
Zynga’s market cap is $2.86 billion now. King’s is listed as $6.4 billion. Sterne Agee tried to address the volatility here. The firm’s Arvind Bhatia, who rates the gaming company as Neutral, said in an intra-day report:
While we haven’t been able to identify a concrete reason for the stock’s 22% appreciation in the last two trading sessions, our best guess is it may have been triggered, at least in part, by end-of-the-quarter short covering and in part by positive sell-side commentary. This is a heavily shorted stock (10.8M shares or nearly 50% of the float is short) with a short-interest ratio of 13 days.
Bhatia also said that King’s rise may be tied to the recent rise in shares of a smaller competitor — Glu Moble Inc. (NASDAQ: GLUU) — now above $5 from under $4 last week. That gain is based upon the release of its Kim Kardashian: Hollywood title.
After seeing this sort of run, it feels like a chat room run from the old day trader days a decade ago. Anyhow, volatility is an understatement for shares having risen from $17 to over $20.80 in just two trading sessions when no news has been released by the company.
ALSO READ: Active Trader Poll: Predict Where MannKind Stock Goes in 2015
As for the King Digital volume spike, the stock hit 5.9 million shares by 2:30 p.m. ET (with 90 minutes to close, plus after-hours). Average volume is 1.31 million shares. Volume was almost 3.5 million shares on Friday, but Monday’s volume is the highest reading since the 6.75 million shares traded back on May 7 and then again since the first and second day this stock ever traded from the March IPO (41 million on March 26 and 8.4 million on March 27).
Want to Retire Early? Start Here (Sponsor)
Want retirement to come a few years earlier than you’d planned? Or are you ready to retire now, but want an extra set of eyes on your finances?
Now you can speak with up to 3 financial experts in your area for FREE. By simply clicking here you can begin to match with financial professionals who can help you build your plan to retire early. And the best part? The first conversation with them is free.
Click here to match with up to 3 financial pros who would be excited to help you make financial decisions.
Have questions about retirement or personal finance? Email us at [email protected]!
By emailing your questions to 24/7 Wall St., you agree to have them published anonymously on a673b.bigscoots-temp.com.
By submitting your story, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
