Even Carver Bancorp Can't Explain The Stock's 260% Rise

Carver Bancorp Inc CARV stock dropped 17 percent on Friday morning after the company on Thursday afternoon issued a press release addressing the recent surge in trading activity in the stock.

What Happened

Over the past two days, Carver stock has experienced extreme trading volume that has pushed the microcap stock higher by more than 260 percent. Carver issued a press release stating the company is unaware of any fundamental reason for the surge in volume.

“While the Company's general policy is not to comment on market rumors or speculation, including market activities, the Company confirms that it has not taken any corporate action that would explain the trading activity and is not in possession of any material, non-public information that would prompt the trading activity,” Carver said in the release.

Why It Matters

With the company confirming there’s no news driving the big move, it’s likely Carver is simply the latest stock to skyrocket thanks to an explosive recipe of low float and high volume.

According to Yahoo Finance, Carver has a minuscule float of just 1.19 million shares and an average daily trading volume of just 109,000 shares. On Thursday, Carver’s trading volume was well over 6 million, which accounts for the extreme movement in the stock.

A lack of liquidity plus heavy buying from a handful of sources created a large move in share price. When momentum traders joined the action, the gains accelerated.

What’s Next

Without any fundamental news to justify the gains, these type of low-float spikes typically have a short shelf life. Traders should expect a steep pull back in coming days barring any developments from the company.

The stcok traded around $9.55 at time of publication. 

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