Aditxt (NASDAQ: ADTX) stock is up 460% on Thursday and then down again 48% after hours. So that’s half the ADTX stock price rise gone already - and if we look at the intraday prices it’s more than that. Perhaps 800% up and then a vertiginous fall of 63% or so. The trigger for this seems to be the private placement of some stock. We tend to think that the price reaction to that placement is unreasoned, silly beyond words in fact. But the price did move that much, market prices are market prices and so on.
As to what’s done at Aditxt: ”Aditxt, Inc., a biotech company, develops technologies focuses on improving the health of the immune system through immune mapping and reprogramming. The company develops AditxtScore that allows individuals to understand, manage, and monitor their immune profiles in order to be informed about attacks on or by their immune system; and Apoptotic DNA Immunotherapy, a nucleic acid-based technology that utilizes an approach that mimics the way the body naturally induces tolerance to its own tissues.” Well, yes, research pharma stocks can be volatile, but not this much.
The news is: “Aditxt, Inc. (NASDAQ: ADTX).... sale of an aggregate of 1,000,000 shares of common stock (or pre-funded warrant in lieu thereof) at a purchase price of $10.00 per share (or pre-funded warrant in lieu thereof) and accompanying warrant, in a private placement priced at-the-market under Nasdaq rules. Each share of common stock (or pre-funded warrant in lieu thereof) is being offered in the offering together with warrants to purchase one share of common stock at an exercise price of $10.00 per share.” It’s entirely true that that’s pretty darn good off a $1,8 million market capitalisation. And yet the reaction seems overblown to us.
Aditxt stock price from Google Finance
We’ve looked before at Aditxt: “That something is to simply declare that what used to be 40 pieces of stock are now just the one. A one for 40 reverse share split: “Aditxt, Inc. (ADTX) will effect a one-for-forty (1-40) reverse split of its Common Stock. The reverse stock split will become effective on Friday, August 18, 2023.”
“This does rather leave open the question of why they’d want to stay on NASDAQ. And the answer there is that the OTC, the next level down of the markets, has less liquidity and thus it’s much more difficult to raise capital. And our reading of the Aditxt accounts suggests that they’re going to want to raise some more capital real soon now. So, retaining the NASDAQ listing is important to them.”
That does seem to have worked out, doesn’t it? Fix the nominal stock price with a reverse split then raise more capital.
As to what happens next. Those warrants are immediately exercisable. So, sensible people might well exercise them then sell into the market. That would make the rump holding - the common equity - a free position given current prices. Our best guess is that how many do that is going to be the determinant of the Aditxt stock price in this immediate future. Assuming, of course, that they’ve not already done exactly that.
