QMMM stock price suffered a harsh reversal today, Sept. 10, as it plunged by over 40%, making it one of the top laggards on Wall Street.
Shares of Nasdaq listed QMMM share price plunged to $113, down by over 63% from its highest level this week. This plunge brought its market capitalization to over $6.9 billion.
QMMM Holdings, a Hong Kong-based advertising company, made headlines this week as it surged by over 4,000%.
The surge happened after it announced its entry into the cryptocurrency industry. Its goal is to develop a platform that integrates artificial intelligence and blockchain technology to create crypto analytics and an autonomous organization.
The company will also launch a cryptocurrency treasury with Bitcoin (BTC), Ethereum (ETH), and Solana (SOL). It will have about $100 million at launch and will differ from other recently launched treasury companies because of its diversity.
The QMMM stock price plunged today, possibly as many investors who rode its big gains started to sell the shares to book profits. It is common for stocks and cryptocurrencies that experience a sudden surge in value to pull back after a while.
QMMM stock also plunged in line with the performance of other crypto treasury companies. For example, Strategy has plunged by over 30% from its highest level this year. Other companies like Trump Media, GameStop, and MicroCloud Hologram have all plunged after launching their Bitcoin treasuries.
QMMM share price crashed, possibly as investors positioned for a potential cash raise from the company. In most cases, companies sell shares when their stocks go parabolic. This is plausible because the company has a long record of selling its ordinary shares. It recently launched an $8 million public offering.
There are also concerns that QMMM is a highly overvalued company. Its most recent results showed that its revenue dropped to $2.6 million in the last financial year from $2.8 million a year earlier. Its net loss rose to $1.58 million from $1.29 million.
Technicals also explain why the QMMM share price is crumbling. The stock moved to the markup phase of the Wyckoff theory on Tuesday as it soared. This phase is normally followed by the distribution and markdown, where an asset crashes.
The stock also became highly overbought, with the Relative Strength Index hitting 98. Highly overbought stocks normally drop as investors sell or pare back their holdings.
QMMM share price is also falling amid the ongoing mean reversion, where an asset plunges and moves close to its historical average.
Therefore, the most likely scenario is that it plunges in the coming weeks as the crypto strategy launch hype fades.
