Zura Bio (NASDAQ: ZURA) stock had a very inauspicious start to life on NASDAQ with an 11% fall. That was Tuesday. But on Wednesday ZURA took off with an up to 411% rise at one point, closing out the day at 314% up. Zura Bio is also another 11% up premarket this morning. One minor little puzzle is why there was that day's wait. That meant that people didn't like the issue and then really, really, loved it and all in 24 hours?
The background here is that Zura is a UK based biotech company which came to market in a SPAC deal. The shell it reversed into (to use the Brit terminology for a SPAC) was JATT Acquisition Corp. Well, OK, so that's a SPAC deal then. The stock trades at $10 or thereabouts because that's what the cash holding is, then will move on news of who- or what- ever the merger will be. Zura has two candidates in drug testing in the areas of asthma, COPD, diabetes and a form of alopecia.
Zura Bio stock price from NASDAQThe question becomes though, well, why the rocketing? Sure, that 24 hour delay before the revaluation is interesting but why the soar at all? There's no new piece of news to justify this, it's not like the FDA has just announced an approval or anything.
The actual answer is something merely technical. The float here is small. That means that even marginal changes in sentiment will have an effect upon that ZURA stock price. Simply because there aren't that many pieces of Zura Bio stock on the market that people can buy into - most of it is still in the hands of insiders.
The lesson of this for us out here is that Zura stock is likely to remain volatile. Sure, this could be some new and permanently higher level of value. But the deep lesson of low floats is that small changes in belief will lead to large changes in valuation. This works on the downside as well as the upside. This might well make Zura Bio a terribly interesting instrument to trade but it does mean it's not an invest and forget proposition. This may well change soon enough which is another thing to look out for. The initiators of the SPAC itself aren't limited in their sales for very long.
