Petros Pharmaceuticals (NASDAQ: PTPI) stock is up 99% yesterday. PTPI stock also started falling after hours, down 10%. The big and interesting question is what is driving all of this? The answer is - almost certainly - nothing very much. Sure, that's a disappointment as we'd like to know what is going on so that we've an idea of how to trade this - price volatility is, after all, the trader's friend. But in the absence of any other information we might just have to conclude that this is just one of those things. Or, perhaps, that here we go again.
For we've seen this sort of action before in Petros: “Petros Pharmaceuticals (NASDAQ: PTPI) is has been up as much as 154% this morning. Of course, as traders we like price volatility. For if we can get on the right side of it then we can make money - it is only by buying and selling at different prices that we can make money as traders. Holding on for the dividends is investing and that doesn't quite get the juices flowing in the same way.” Our conclusion back then in April was just that someone had decided to drive up the price in order to profit from having done so. Given that the price peaked and then floated, gently, back down to its starting point over the next couple of months we were probably right too.
Petros Pharmaceuticals stock price from NASDAQ
So, when this happens again we should look in all the same usual places. There's no new information on Edgar (the SEC's database of company announcements). There's nothing in any of the news search engines. We've just got the price soaring.
“And that's where microcaps like Petros can be problematic. The PTPI market capitalisation is a couple of million dollars, $2 million say (it does, of course change dependent upon where in this price cycle we try to measure it). So, it could be that some minor change in something or other will markedly change the stock price of a company this size. Or, alternatively - and this does happen in microcaps, don't be shocked - it could just be that some amount of trade has driven the price haywire. Even, someone deliberately drives the price change.”
We'd not say we are definitely, definitively, correct this time as well but we'd certainly suggest that that's the way this is looking. It's a pretty good day to be doing it too. There's a real deal in Recursion Pharmaceuticals so it wouldn't take much to spark a momentum trade if that's what someone wanted to do. As we say, we don't know this to be true but that's the way we're thinking.
