iBio Inc. (NYSEMKT:IBIO) has had an incredible couple of weeks. Trading at around fifty cents for the last year and a half, it suddenly shot to $2.41 on October 13, crashed, then shot up again to $3.21 at the end of last week as the company claimed that it would play an integral in manufacturing any Ebola vaccine, and is back down to $1.33 at the moment. Melissa Davis at The Street Sweeper shows just how unlikely this really is, opening up a short selling opportunity if the company keeps it up.
iBio’s Ebola-narrative looks like PR hype
In a more relaxed scenario, it’s possible that iBio Inc. (NYSEMKT:IBIO) might win contracts for drug manufacturers to use its technology as part of an Ebola vaccine, but that’s not the world we live in. iBio’s delivery system is still in early stage safety trials, but MAP Pharmaceuticals Inc. (NASDAQ:MAPP) (which manufacturers ZMapp, the potential vaccine) already has an established relationship with iBio rival Icon Genetics. Why it would break off that relationship for an unproven company with an unproven technology is hard to fathom. Add in the intense pressure to find a solution to the developing Ebola epidemic and it becomes unimaginable.
And apparently it is unimaginable, even for iBio Inc. (NYSEMKT:IBIO) which doesn’t mention Ebola in the 10K it released last month or the prospectus it filed with the SEC earlier this week. That the company sold 20 million shares at $0.44 apiece on October 6 doesn’t help its case.
“Granted, IBIO seems to prefer playing it a bit safer by hyping its prospects in casual press releases instead,” writes Davis, who is short on IBIO.
The latest penny stock fad to avoid
Unfortunately, anytime there is a big new story in the news, you can count on some penny stocks to latch on and ride the wave as far as they can. We’ve had marijuana stocks and Ebola stocks so far this year, and next year will bring something else. There’s a reason penny stocks have a poor reputation with so many investors: their prices are so low that the volatility can be immense, and the lack of analyst coverage means that most investors are flying blind when they hear about a ‘hot’ new stock. Fundamentally, there’s nothing wrong with investing in a company just because it’s stock price is low, but rushing in to take advantage of the latest fad is asking for trouble.