The stock of a company listed in the Indian stock market has given such great returns that it has surprised investors all over the world. No other stock in the world has given this much return to investors in the last one year. It was discussed a lot on social media throughout the year. But now, it has come into the sights of the stock exchange, and a major decline is expected. This company is RRP Semiconductor Limited. The stock, which has become a sensation on social media, has surged more than 55,000% in the 20 months through December 17. The company is valued at more than a billion dollars, and no other stock worldwide has come even close to this high.
This rise has come when the company has not yet sold a single product and has neither made any profit nor made any sales. This shows that the company looks fundamentally weak. In its latest financials, the company showed negative revenues, stated that it had only two full-time employees, and acknowledged that it had not yet commenced any semiconductor manufacturing activity.
Consecutive 149 Upper Circuit
Online hype around chip manufacturing, very low free float, and a growing group of retail investors helped fuel the rally. Despite repeated warnings from both the exchange and the company, it hit 149 consecutive upper circuits. However, it now looks like the rally is slowing down, and the regulator is stepping in.
The Securities and Exchange Board of India has launched an investigation into the surge in RRP’s share price to rule out possible wrongdoing, Bloomberg quoted a person familiar with the matter as saying. This stock worth ₹14,000 crore, which the exchange has now limited to trading only once a week, is now being traded. It is down 6% from its all-time high.
Will the AI bubble burst?
Amid the global craze for AI, retail investors are eager to buy any stock that is believed to be a proxy for the global chip boom. This craze increased further in India when PM Modi announced an incentive program for semiconductor chip manufacturing. This announcement has created such a hype that people are eager to invest in chip-based stocks.
Only one person owns 98% of RRP shares
The filings show that about 98% of RRP shares are held by a single person, Rajendra Chodankar, and some of his associates, many of whom are also involved in other RRP-related companies such as RRP Defence, Indian Link Chain Manufacturers, RRP Electronics, and RRP S4E Innovations. Exchanges have kept the stock under surveillance and issued a warning to investors.
What update did the company give?
In an exchange filing on November 3, RRP said it has not undertaken any semiconductor manufacturing, has not applied for any government incentive schemes, and denied any celebrity association.