The stock of a Long Island video chat app maker is taking risk-indulgent investors on a wild ride, fueled in part by cheerleading on social media sites for stock traders.
Shares of Jericho-based Paltalk Inc. rose 3% to close at $8.98 on Thursday, part of a volatile three-week span.
"Cmon my pumpers work it overtime haha I need it higher," said OneWolfCapital on the Stocktwits website Wednesday. "Ready for next rip $20+," said another poster, TargasMum.
David Sacco, who teaches finance at the University of New Haven, said Paltalk and other "meme" stocks represent a change in the dynamics of Wall Street.
"It's a different generation," he said of the investors who frequent the stock chat boards. "They're video gamers. They gamble a bit."
Traditional investors gauge the value of stocks based on price-to-earnings ratios, future cash flows and other comparative financial measures of the underlying company.
Those data points, however, carry little weight for the meme-stock crowd, Sacco said. "There's a whole new part of the investment world that doesn't care about fundamentals."
Paltalk chairman and chief executive Jason Katz did not respond to requests for comment.
Twelve months ago, Paltalk's stock was in the doldrums, trading below a dollar.
At the end of September, however, it began a meteoric rise. On Sept. 23, the stock closed at $2.93 with volume of about 16,000 shares, and by month's end the closing price more than tripled again to $10.57 and volume ballooned to more than 99,000.
The meme stock trend is marked by individual "retail" investors who band together on social media to push the shares of companies higher.
The phenomenon gained momentum during the COVID-19 pandemic when homebound investors found themselves with time to follow the stock market.
Mitchell Goldberg, president of Melville investment firm ClientFirst Strategy Inc., said investors should exercise caution.
"Any time you're buying stock based on conversations on Reddit [a popular online bulletin board], it's really for your gambling money," he said.
In August, Paltalk moved its stock listing from the over-the-counter markets to the higher profile Nasdaq Capital Market and priced 1.16 million shares in a stock offering at $3.
In September, the company announced it was hiring Clear Think Capital to sharpen its communications with potential investors.
In the quarter ended June 30, Paltalk posted net income of $822,000 on revenue of $3.4 million. That compared to net income of $532,000 on revenue of $3.4 million in the 2020 quarter.
Paltalk hosts video-chat communities through its Paltalk and Camfrog products, which are available in more than 180 countries on Windows, Mac OS, iOS, Android and other devices.
In 2020, the company rolled out board games, including poker, blackjack, bridge and chess, that allow users to play via video chat in real time.
Users overall are roughly one-third domestic and two-third international, the company said in its annual report.
As of March, the company had 22 employees.