PLx Pharma (NASDAQ: PLXP) is up 137% this morning premarket. The difficulty with this is that PLXP is a very definite microcap - $3 million or so total market capitalisation. It's rather more true to say there isn't in fact an actual company there - not of any size at least - than it is to say there's something worth trading. The difficulty is that in such a market cap even a small change in trading sentiment can lead to vast price changes like this. It's not even true that the short interest (0.54%) is of any interest.
That PLx Pharma is down 97% over the past 12 months gives a good idea of the market's more general view of the corporate performance. PLXP is a commercial-stage drug delivery platform development company. But as is obvious there's not much commercial-stage going on here. The last accounts we have show revenues of $0.39 million and that's down 97% Year on Year. Really, just not a good performance at all.
PLx Pharma premarket trades from NASDAQ
On the other hand we do seem to be seeing real trading here. This doesn't have the obvious hallmarks of some bot trading in order to deliberately raise the price - which does, sadly, happen in thin markets at the open of the day sometimes.
We've no corporate news. Nothing on Sedar, nothing in fact in the usual places at all. So, all we can really say here is that sentiment has changed. Some number of people have decided that PLXP is worth more than everyone else thought it was on Friday. So, they're buying and the price is going up. Quite what has changed their mind we don't know.
Which is what produces the trading difficulty. As we don't know why PLXP has gone up we can't decide whether we think it's going to continue going up, remain on this new plateau or fall back again. A useful assumption is that it will fall back but that's not strong enough to instigate a short position. The best trading advice is to find out why the price change and then make a decision.