Why Is DatChat (DATS) Stock Up 65% Today?

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There are a few interesting stocks making big moves in today’s market that many investors are starting to pay attention to. One such company is DatChat (NASDAQ:DATS), a small-cap secure messaging and social media platform. Shares of DATS stock surged more than 65% in early afternoon trading after the company announced it would be spinning off its Habitat platform into a separate publicly-traded company.

This move is notable due to Habitat’s model as an artificial intelligence (AI) and gaming-focused platform. With so much interest in these key growth areas, it appears DatChat’s management team is looking to maximize shareholder value as a result of this deal.

Let’s dive more into what was announced and why this stock is seeing heavy buying pressure in today’s session.

DATS Stock Soars on Announced Spinoff

In today’s press release, DatChat noted the company intends to distribute its 75% ownership in SmarterVerse, Inc. (the parent company of the Habytat AI gaming platform) to shareholders. This distribution should ultimately lead to a standalone public company following the distribution, but exactly how that will happen remains to be seen.

The company reports that it intends to focus solely on its core business, with this move viewed as a streamlining of two rather disparate businesses under one umbrella. Interestingly, it should be noted that Habytat is a relatively new offering from DatChat, suggesting this launch, followed by a spinoff, is a strategic move from the company’s management team.

Another key factor that appears to be positively impacting DATS stock today is its seeming affiliation with other Trump-related entities. In previous rallies of stocks tied to former President Trump, DatChat has rallied, likely due to the privacy-focused nature of this secure messaging/social media company. Perhaps the refocusing of its business toward its core offering has investors buying into this thesis once again, and with Trump’s recent Iowa win, there’s some momentum to be had.

Certainly, this is a stock momentum traders will be focused on over the next few days. But with a market capitalization under $10 million after today’s rally, it’s still far too speculative for the average investor to consider.

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On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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