Urban One set up for a violent move

In June 2020, shares of Urban One (UONE) went from below $3 to over $50 in a matter of days.

Almost one year later, the Nasdaq halted trading on a limit-up day.

That’s where shares pop anywhere from 10% – 20% in a matter of minutes.

The move caught the attention of traders and investors across the board.

In fact, not only was it one of the top searches in our TrackstarIQ data but also on Reddit forums as well!

So, what exactly happened here?

More importantly, is this the start of a move like we saw last year?

Urban One in a nutshell

Back in 1980, Cathy Hughes founded Radio One in Silver Spring Maryland.

It started off as a radio station. 

Today, the company owns and operates 63 broadcast stations including 54 FM/AM stations, 7 HD stations, and 2 lower power television stations.

Specifically targeting African-American and urban communities, Urban One includes syndicated programming as well as programming on digital and online platforms.

For years, the company struggled through swings in revenues as consumers transitioned further away from radio broadcasts.

Revenues increased from 2011 to 2015 and have since fallen every year. In 2020, the company took a one-time asset impairment which pushed net income negative for the first time in several years.

What caused the spike

News hit the wire that the company won a bid for a Casino in Richmond, Virginia.

While officials accepted their proposal, voters have the ultimate say.

Urban One aims to build an integrated casino in Richmond, bringing together a hotel, spa, restaurants, event center, and 100,000 square foot casino.

With only 6.12 million shares available for trading, it doesn’t take much to move the stock. Over 80 million changed hands last Thursday followed by over 40 million the following day.

The company also trades Class D shares with a float of 19.15 million. The only difference is that Class D shareholders have no voting rights, and Class A shareholders can convert to Class D at a 1:1 ratio, but not the other way around.

In a nutshell – lots of people wanted to trade a thin stock.

While shares pulled back off their highs, there is still a good chance the ‘Reddit’ crowd attacks this one again.

Our hot take

This is more of a trade than an investment. Right now, shares are primed for a move on any news.

So if you’re feeling frisky and risky, keep an eye out for chatter on this name.

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