Nova LifeStyle, Inc. (NVFY) stock prices skyrocketed by a staggering 71.50% as of the market closing on July 8th, 2021, bringing the price per share to USD$6.50. After-hours trading saw the stock plummet by 23.08%, bringing it down to USD$5.00.
NVFY Exhibition
June 21st, 2021 saw the company announce the successful exhibition of a new design line at the High Point Market furniture trade show, which ran from June 5th, 2021 to June 9th, 2021. The event offered the company a chance to showcase their product line and engage with potential buyers from all over the globe. The company has been pushing its sales and marketing strategy through the pandemic, facilitating interactions with loyal current and prospective customers.
Net Sales
The first quarter of 2021, ended March 31st, 2021, reported net sales in the amount of USD$3.3 million, up 51% from the USD$2.2 million reported for the same time period over the prior year. Net loss from continuing operations for the quarter came out to USD$763,537, down from the USD$1.01 million in Q1 2020.
Effects of the Pandemic
With the disturbances stemming from the onset of the coronavirus pandemic, the company strove to ensure the return of business operations to pre-pandemic levels. While the effects of the pandemic are still felt, NVFY’s sales growth is reflective of its strength and commitment in light of the company’s various collaborations.
Gross Profit Margins
The success of the company’s strategy to sell higher margin products is indicated by the increase of gross profit margins. While the first quarter of 2020 reported 35%, Q1 2021 saw the company report gross profit margins of 41%. NVFY plans to continue focusing on its sales channels, facilitating the delivery of a line of differentiated and high quality products.
Meme Stock Phenomenon
Despite these developments, the recent activity seen by the company’s stock price does not seem justified. In the absence of any significant recent news or changes in fundamentals, it seems likely that NVFY has found itself to be the newest target of the meme stock phenomenon. Retail investors target underdog companies to pump in a coordinated short squeeze, resulting in highly volatile stock activity.
Future Outlook for NVFY
Armed with the fortuitous surge in equity value owing primarily to the meme stock phenomenon, current and potential investors are hopeful that the company will leverage the additional resources at its disposal to facilitate more organic growth in the long run. The company is keen to maintain the trajectory of its growth by justifying natural investments in their business model.
