Baofeng Technology has become the latest stock to wow the public with skyrocketing share prices after being listed in March.
Despite being a tech minnow known for its software products such as the Storm Media Player (baofeng literally means storm), Baofeng Technology's worth has surged more than 2,000 percent to around 190 yuan (31 U.S. dollars) per share as of Friday from an offer price of 7.14 yuan.
It has jumped by the 10 percent daily limit on nearly every trading day, including Friday, defying market volatility.
While newly listed stock predictably cause frenzied subscription as investors bet on handsome first-day gains, which averaged at 43 percent in 2014, Baofeng's headline-making bull run has caused a storm of scepticism.
The net profits of the Beijing-based company in the past four years stood at 49.3 million, 55.9 million, 38.5 million and 41.9 million yuan respectively, suggesting no obvious growth. It suffered a net loss of 3.21 million yuan in Q1 this year.
Within one month of its listing, three staff members from its management have opted for resignation, giving rise to worries that fat gains have satiated their appetite for the company's long-term development.
However, individual investors and financial institutions paid little attention to the accumulating risks and continued to bet on its rise on the stock market.
Statistics showed that four securities company offices splurged a combined worth of 565 million yuan on Wednesday when the stock experienced a rare short period of volatility.
Baofeng is not an isolated case. Since China Securities Regulatory Commission (CSRC) restarted the IPO market last June, nearly all companies rose sharply shortly after being listed in Shanghai and Shenzhen.
After being bearish for about six years, China's stock market had staged an extraordinary rally since the second half of 2014 and created a bull run amid huge daily turnover. The key Shanghai index jumped 53 percent in 2014.
Millions of new accounts are being opened every week since March. The CSRC announced on April 24 that two batches of IPO applications instead of one will be approved every month.
With around 200 IPOs planned for this year, it seems more Baofeng-style gold rush is on the horizon if investors continue to be indiscriminate.
