Koss Family Cashes Out Amid Reddit-Fueled Short Squeeze

Koss Corporation KOSS is one of the handful of stocks that has gotten caught in the wave of short squeezes driven by Reddit’s WallStreetBets community in recent weeks.

While Reddit traders may still “like the stock,” Koss company insiders, including the Koss family itself, aggressively sold more than $44 million shares of stock in the last week.

What Happened? According to the latest SEC filings, the Koss family, owners of 75% of the headphone company, sold $31 million in shares in the past week as the stock’s price spiked from under $4 to as high as $127.45 in a matter of days.

Company executives and directors reportedly sold another $14 million worth of stock in the past week.

Related Link: How And Why Did The Stock Market Crack This Week?

The $44 million in shares that insiders unloaded far surpass the entire $25-million market cap of the company prior to the short squeeze.

Why It’s Important: Traders on Reddit targeted GameStop Corp. GME and other stocks with large amounts of short interest and collectively attempted to pump up the share prices of the stocks to force hedge funds and other institutional short sellers to exit their positions.

Now that the sell-off stage of the pump-and-dump cycle has begun, new filings show Koss insider stockholders were actually the ones exiting their positions in droves.

In the most recent quarter, Koss reported just $127,000 in net income on $5.2 million in revenue.

KOSS Price Action: The stock was down 25.75% at $19 at last check Thursday, falling below $20 for the first time since the squeeze picked up steam last Wednesday.

Benzinga’s Take: Many younger and newer retail traders may not have experienced it before WallStreetBets, but pump-and-dump schemes have been around on Wall Street for decades.

The early pump-and-dump investors and the opportunistic company insiders like the Koss family are always the ones that make the big money, and the later investors are the ones that lose it.

Photo courtesy of Koss Corp.