Geo Energy share price in last dance?
According to the latest World Bank report, coal prices had reached an all-time high in March following the start of the war in Ukraine. The surge is due to the increased demand for coal as a substitute for natural gas in electricity generation. Against this backdrop, Geo Energy share price stunned many investors as the share price of the coal mining group crashed from a high of $0.58 in April 2022 to the current $0.38. The bizarre drop led to a query from a concerned SG Wealth Builder Member.
What made the meltdown of Geo Energy share price so extraordinary was that it came on the back of a stellar financial performance. In February 2022, the Group announced that net profit for FY2021 amounted to US$179.1 million, representing a complete turnaround from the net loss of US$11.5 million from operations in 2020. However, a deeper analysis revealed that the outlook for Geo Energy may not be so rosy in the near future. Apparently, the big boys are aware of this and are shorting the counter.
In my previous article, I have shared with readers how to use SGX short-selling data to determine if a particular SGX stock has been targeted by short-sellers. In this article, I will apply the methodology and provide the explanation for the seemingly inexplicable fall of Geo Energy share price.
As a matter of personal policy, I have avoided investing in penny stocks in recent years after burning my fingers in a S-chip more than ten years ago. From my experience, investing in penny stocks may generate great returns when the share prices soar. Conversely, you may incur big paper losses when the tide turns against you. Many times, the volatilities of the penny stocks are driven by the short-sellers and sell-offs by the big boys.
| Period | Short Sell Volume | Short Sell Value |
| 14 – 18 March | 3.5 million | $1.6 million |
| 4 – 8 April | 9.9 million | $5.1 million |
| 9 – 13 May | 12 million | $6 million |
| 20 – 24 June | 18.9 million | $7 million |
Source: SGX
According to short-selling data extracted from SGX, the short sell volume surged to almost 10 million shares in the week of 4 April. This is the period when Geo Energy share price started to peak. Consequently, the counter spiralled out of control in May as short selling volume rose to 12 million shares in the week of 9 May. Geo Energy share price continued its dismal run in June as the volume of shorts piled up to 18.9 million shares. Evidently, the data revealed that short sellers had a hand in the stock capitulation.
Then again, what could have pipped short-sellers’ interest in Geo Energy? Amid the boom in commodity prices, shorting against a profitable coal mining company could be risky as it may backfire against the short sellers. In my opinion, the interest could be triggered by the sell-offs of the substantial shareholders.
Note that this is an opinion article and not meant to be a financial advice. Please do your due diligence or engage financial advisors before investing in the stock market. Furthermore, I am not vested and have never invested in Geo Energy share before. Whether Geo Energy share price will surge or collapse has no impact on me. Thus, this article is not meant to induce readers to make any form of investment decisions.
Geo Energy share price ran out of steam?
The horror for Geo Energy share price basically started when one [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]
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