The First 10-Bagger Stock of the Current Bull Market Emerges
On October 21, the A-share market was relatively active. One notable phenomenon was the emergence of the first ‘ten-bagger’ stock of the current bull market - Airang Software, which has risen over 10 times in just 15 trading days.
The A-share market continued its upward momentum on October 21, with the computer sector leading the gains. One stock in particular captured the spotlight - Airang Software, which became the first “ten-bagger” stock of the current bull market.
Airang Software is a high-tech company focused on providing artificial intelligence and virtual reality technology solutions for the financial industry. Its main clients are large commercial banks, for which it offers products and services such as online deposits, payments, loans, operations, identity verification, as well as customized development. The company is also expanding into non-banking financial sectors such as securities, insurance, exchanges, payments and consumer finance.
Since September 24, Airang’s stock price has skyrocketed from 9.22 yuan to over 97 yuan, a cumulative increase of 976.67% in just 15 trading days. This makes it the first stock to achieve a ten-fold increase in the current bull market which started in late August. During the same period, the overall A-share market also trended upwards, driven by favorable policies, with the computer sector performing especially strongly.
However, a closer look at Airang’s fundamentals reveals a different picture behind the soaring stock price. In the second quarter of 2024, the company’s operating income decreased by 18.72% year-on-year to 139 million yuan, while net profit fell by 45.01% to 9.3347 million yuan. This marked the first quarter of year-on-year net profit decline after eight consecutive quarters of growth. The company attributed the weaker performance mainly to a slight decrease in technology development income and costs.
As the saying goes, the market can remain irrational longer than you can stay solvent. While riding the wave of a bull market rally can be thrilling, it’s critical for investors to stay grounded and focus on the long-term fundamentals and intrinsic value of the companies they invest in. Chasing parabolic price increases without regard for underlying business performance is an extremely risky endeavor.
The emergence of a “ten-bagger” stock like Airang Software in such a short timeframe says more about speculative market sentiment than the company’s prospects. As the computer sector soars, drawing in more hot money, valuations are becoming increasingly stretched and divorced from reality. Late investors jumping in risk being left holding the bag when the music inevitably stops.
Seasoned investors advise caution in frothy markets - take some profits, control your position sizes, and always maintain a margin of safety. The path to sustainable wealth is paved by high-quality companies that can compound value through both bull and bear markets over many years, not by chasing unsustainable rallies. As famed investor Warren Buffett says, “Be fearful when others are greedy.” Words to heed as more ten-baggers emerge to tempt the undisciplined.