The Nigerian Alternate (NGX) has seen a surge in retail participation, particularly this 12 months.
Nevertheless, with the rise in retail buyers comes the rise of pump-and-dump shares, that are manipulated to draw investor curiosity for fast features.
Pump-and-dump shares are those who expertise a fast, synthetic rise in worth, pushed by hype or coordinated buying and selling fairly than real enterprise development or sturdy fundamentals.
For instance, in 2024, Juli Plc ranked first on the NGX by way of share worth valuation, with a staggering 1,646% year-to-date acquire.
This focus of possession signifies that a small variety of shareholders can considerably affect the inventory worth.
In a pump-and-dump inventory, insiders can shortly inflate the value by shopping for massive volumes, then dump their shares as soon as the value is inflated, leaving unsuspecting buyers holding shares that quickly lose worth when the value corrects.
Pump-and-dump shares usually share frequent traits that buyers can look ahead to to keep away from falling into it and dropping cash.
Low buying and selling liquidity
Low liquidity is a major pink flag typical for pump-and-dump shares.
Instance: Chellarams Plc has posted a powerful 339% share worth YtD acquire, rating fifth on the NGX.
Firms that fail to adjust to the NGX’s free float guidelines; their shares are extra susceptible to manipulation. Free float refers back to the portion of shares out there for buying and selling in the marketplace.
In keeping with NGX guidelines (Rule 12.2.b.4.a & b), for a corporation to be listed on the Premium Board, it should have a minimal free float of 20% of its issued share capital, or the worth of its free float have to be equal to or above N40 billion.
Shares that don’t meet these necessities are inclined to have low liquidity and higher worth manipulation dangers, making them pump-and-dump shares.
An irregular spike in buying and selling quantity with no basic information to justify it’s a key signal of a pump-and-dump inventory.
Shares with low liquidity are notably susceptible, as just a few massive trades can dramatically transfer the value.
Instance: NCR Nigeria has skilled a 519% YtD acquire in 2025, in comparison with 26% YtD in 2024. Nevertheless, it has additionally seen important spikes in buying and selling quantity:
Regardless of NCR Nigeria’s compliance with the free float requirement and a {financial} turnaround, reporting N238 million revenue for 9M 2025 (up from a N2.7 billion loss in 2024), these quantity surges increase considerations about potential worth manipulation.
To detect pump-and-dump shares, buyers also needs to consider whether or not the corporate’s market capitalization aligns with its fundamentals.
Allow us to have a look at SCOA Nigeria. The corporate has a market capitalization of N4.61 billion and has seen a 245% YtD acquire in 2025, rating eleventh on the NGX.
Regardless of this worth motion, SCOA Nigeria reported a lack of N36 million in 9M of 2025, although it posted a revenue of N56 million in 9M 2024.
With income hovering round N1.5 billion and internet belongings of N1.2 billion, the 245% YtD acquire and market cap appear out of sync with the corporate’s earnings and asset base.
This might point out that the inventory is overvalued or pushed by speculative buying and selling fairly than sturdy fundamentals.
Above are typical traits of pump and dumb shares, buyers ought to be careful for, to keep away from shopping for these pump-and-dump shares:
That mentioned, it will be significant for buyers to
Whereas these shares could seem interesting as a consequence of their low worth, they’re usually extra unstable and susceptible to manipulation.
