The Obseva SA (NASDAQ: OBSV) stock price soared 88.7% despite the lack of news from the biopharmaceutical company. Given the lack of new releases, we must look at previous news to determine if investors are reacting positively to a past announcement.
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Luckily, we do not have to look far to find what we seek. ObsEva announced a massive reorganisation that would lead to its delisting from the Nasdaq Capital Markets while maintaining its SIX Swiss Stock Exchange listing.
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ObsEva stock rallied 64% after the company announced the reorganisation, which was interesting to say the list given that the firm is about to deregister its US shares. Existing shareholders will be compensated for their holdings, but they may not make a profit by rushing to buy the OBSV shares now.
Still, the company’s stock has attracted significant attention from retail investors looking to buy before the shares are delisted. Over 11.78 million ObsEva shares had changed hands at the time of writing as retail inventors piled into the trade.
Generally, as an astute investor, it never pays to chase a stock higher, and the same logic applies to ObsEva shares. I would sit this out and let those looking to make a quick profit before the imminent delisting keep doing what they are doing.
ObsEva has fired most of its US-based team, including the CEO and the board chair and is currently looking for a CEO who will be based in Switzerland. The company also appointed its founder Dr Ernest Loumaye as its Board chairman.’
Such drastic reorganisations are not new, as many companies have taken similar measures when theu are looking to cut costs and become more efficient. The company also retired its $6.5million debt from JGB Management, Inc, while avoiding the $1.1 million early payment penalty.
Investors should look forward to the subsequent announcements from ObsEva as the reorganisation unfolds and the firm delists its shares from the US and shifts its operations back to its home market of Switzerland.
*This is not investment advice.
Obseva stock price.
The ObsEva stock price soared 88.68% to trade at $0.12, from Thursday’s closing price of $0.11.
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