TOP Financial Group Stock Skyrockets Amid Reddit Frenzy, Short Squeeze Predicted

The Hong Kong-based brokerage firm TOP Financial Group, listed under the stock symbol TOP, has been gaining significant attention on the popular Reddit forum WallStreetBets. After closing at $20 on Thursday, the stock skyrocketed by 400% in pre-trade on Wall Street, reaching around $100 per share, which represents a 1,500% increase in just two days. The company initially went public on Wall Street in June 2022 at $5 per share, with its value climbing by 400% on the first day. However, until recently, the stock had returned to its original price.

Although no company reports have been published that could explain this surge, TOP Financial Group's popularity on the WallStreetBets subreddit, as reported by Marketwatch, seems to be a major factor. Reddit user Major-Access2321 drew attention to the stock and predicted that short-sellers would cover their positions, leading to a short squeeze that could cause the stock price to rise even further.

In August 2022, another Hong Kong-based company, AMTD Digital, became a favorite of Reddit users. Its stock, listed under the symbol HKD, began trading at $7.8 before skyrocketing more than 21,000% to $1,679 within two weeks, reaching a market value of $300 billion—surpassing Coca-Cola. However, the stock has since returned to its initial offering price.

The Reddit platform has been known to host investment forums like WallStreetBets, which have spurred significant market events like the GameStop phenomenon and the rise of meme stocks. These occurrences are typically characterized by retail investors targeting stocks with heavy short positions, causing hedge funds to cover their shorts and reduce losses, leading to short squeezes that send stock values soaring.

For example, Hong Kong-based trading company TOP Financial Group saw its stock price increase by over 800% in a single day, closing with a 450% gain. The trading volume surpassed 6 million shares, compared to the two-month average of less than 900,000 shares. It appears that this speculative trading originates from Reddit users in the WallStreetBets group, who have been promoting the stock to other users and investors.

When TOP Financial Group began trading on Nasdaq in June 2022 at $5 per share, the company issued a statement advising investors to exercise caution and rely only on official statements and reports submitted to the Securities Authority. Despite this warning, many Reddit users encouraged other investors to purchase the company's stock, anticipating the liquidation of short positions that would drive the stock price higher.

In some cases, the Reddit-fueled frenzy surrounding certain stocks has had a positive impact. GameStop, the first and most well-known meme stock, has seen its share price rise by 20% since the beginning of the year. In recent reports, the company recorded a profit of $0.16 per share, surprising analysts who had predicted a loss of $0.13 per share. Although the stock has experienced volatility since becoming a target for Reddit users, its value has increased 20-fold since August 2020.

On Friday, shares of Cayman Islands holding company Top Financial, which is connected to a Hong Kong-based financial firm, surged by 441% to close at $108.21. The stock reached as high as $256.44 during the trading session before falling to $59 in after-hours trading. In response to the stock's wild fluctuations, the company issued a statement urging investors to rely solely on official statements and filings with the United States Securities and Exchange Commission.

Top Financial operates as a financial services firm in Hong Kong, providing trading services in stocks and options. The company changed its name to Top Financial shortly after its IPO last year, initially operating under the name Zhong Yang Financial