Key points:
- Fangdd Network (DUO) stock price soared 89.5% as Chinese stocks rallied.
- The move was fueled by a change in the Chinese government’s policy stance.
- However, the stock is trading below $1, which could lead to a reverse stock split.
The Fangdd Network Group Ltd – ADR (NASDAQ: DUO) price soared 90% despite the lack of releases from the company. The rally was attributed to the broader rally in Chinese stocks amid news that the country’s government was now focused on boosting economic growth by supporting businesses.
Also read: The Five Best Cheap Tech Stocks under $10.
Investors cheered the change in policy focus by the Chinese government compared to its previous policy stance, where it cracked down heavily on large tech companies that were regarded as a threat to the government’s monopoly power.
The shares of leading Chinese tech companies such as Alibaba and Tencent had suffered immensely in recent months as the government cracked down on them, triggering a flight of foreign capital out of China.
Investors were happy to see the change of strategy by the Chinese government as it looks to support business, which could lead to higher economic growth in China and the rest of the world, given that the country is knowns as the world’s factory.
Furthermore, investors were happy to see that the government was considering relaxing its zero-Covid policy, one of the strictest globally, to a more manageable model that will reduce the number of crippling lockdowns imposed across the country.
Many experts have warned that the frequent Covid-related lockdowns in China could slow down the global economy’s growth this year.
The rally in Chinese stocks was reflected in US stock futures, which were up overnight and during premarket trading. However, as for DUO stock, I’m not sure whether today’s rally will be sustained turning into a long term move.
Investors should also note that DUO stock has been trading below $1 since November 2021, which means it is about to breach the six-month grace period allowed by the US Securities and Exchange Commission to bring its share price back above $1.
Therefore, if DUO shares do not rally above $1 in the next two weeks, we will likely see Fangddd Networks perform a reverse stock split to consolidate its shares and bring its share price above $1.
*This is not investment advice. Always do your due diligence before making investment decisions.
DUO stock price.
DUO stock price surged 89.49% to trade at $0.4690, rising from Thursday’s closing price of $0.2475.
