Over the past week, it looked like only short sellers are interested in trading VLOV, Inc. (OTC:VLOV) shares. Most probably that was the reason for the huge spike yesterday, since the company issued its latest press release early in the morning on Monday. 
VLOV surged all of a sudden to $2.19 during yesterday session, then closed the market with a 33.91% gain at $1.54. The trading volume yesterday was 30,860, compared to an average of 5,870. Such low trading activity suggests that VLOV is extremely illiquid and any unexpected demand could well explain spikes of the share price like the one from yesterday.
On Monday morning, VLOV announced its participation in the Mercedes-Benz China Fashion Week Spring/Summer 2012 on October 27, 2011. The same day, the stock traded 4,900 shares, while the share price did no move at all. Much more interesting is the structure of VLOV trading volume. Yesterday, 24,160 shares of the total volume were shorted, while in the preceding four sessions the entire reported trading volume of VLOV had been made up of short sellers.
Despite the low liquidity on the open market, VLOV had 18.6 million issued and outstanding shares of common stock at the end of June 30, 2011. Also, the company had $49.5 million in total assets on the same date, the larges part of liquid, while VLOV had $6.2 million in current liabilities and no long-term debt.
Moreover, the sales exceeded $41 million and the net income $8.3 million for the first six months of the year, making the current market cap of $28.6 million look too low. There could be may factors outside of a company that could affect that market value, however, especially for a company having all of its business in the People’s Republic of China.
