Webull Corporation (NASDAQ: BULL) investors sure is a happy lot on Monday.
The retail-focused investment platform completed its merger with a special purpose acquisition company (SPAC) to debut on the Nasdaq last week. Today, its shares are already up a staggering 500%.
However, investors should consider pulling out of the BULL stock following such an explosive rally, as the financial services company could fail to sustain momentum in the coming days.
Webull may just be another speculative SPAC listing
Investors are recommended to tread with caution on Webull as the massive surge in its stock price following its merger with a blank check vehicle is reminiscent of speculative SPAC listings of the past.
A quintessential example of that would be Nikola Corporation, which opted for a merger with VectolQ to go public in 2020.
Initially, its share price rallied sharply on hype around its electric and hydrogen-powered vehicles.
However, the excitement was largely disconnected from the company’s fundamentals, as Nikola was yet to produce a single vehicle for sale at the time.
NKLA stock price later plummeted, and the company even filed for Chapter 11 bankruptcy this year, highlighting the risks associated with speculative SPAC listings.
BULL’s stock price looks disconnected from its financials
Much like Nikola’s, Webull’s rally on Monday also looks disconnected from its financials.
By late 2023, the investment platform had about $8.2 billion in customer assets across 4.3 million funded accounts.
Last year, its management confirmed 20 million worldwide users as well.
However, BULL has been notably tight-lipped about its financial performance.
It has not disclosed any revenue for 2024, which makes it challenging for investors to assess its true value.
This lack of transparency remains a major concern that warrants caution while investing in Webull stock.
Plus, the Florida-based company faces intense competition from established players like Robinhood and eToro, which could limit its market share growth as well.
Is Webull a new meme stock?
All in all, the massive increase in Webull stock price today may entirely be related to retail enthusiasm instead of solid financials, which, in a way, makes BULL a meme stock.
So, it’s not entirely unreasonable to believe that Webull shares could tank just as quickly as they soared to a high of about $80 on Monday.
Think of what happened with Newsmax, for example, just days ago.
Its stock soared from the IPO price of $10 all the way up to a high of $265 post-debut.
However, NMAX crashed in the next few days and is now trading at $26 only.
If that plays out for BULL shares as well, you’d be kicking yourself for not selling them at $80, the price at which they’re trading currently.
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