Palatin Technologies Inc’s (NYSE: PTN) share price is up 14% premarket. The volatility in Palatin stock reflects uncertainty about whether a significant revaluation of the company’s prospects is in order.
We should all note that Palatin Technologies is an entirely different company from Palantir Technologies. Palatin, the subject here is a pharmaceuticals company developing products for treating certain eye conditions. Palantir on the other hand is a Silicon Valley company working on data management techniques and systems. Errors have been made on stock markets from similar names.
Palatin Technologies, the pharma company, has a recently highly volatile stock price. The day range is 48 cents to 59, the 52-week range is from 33 cents to $1.30. That’s a lot of volatility and being on the right side of those sorts of price movements is a trading opportunity.
Up to late November, the price was in the 40 to 35 cents range and seemingly going nowhere very much. Then came an analyst upgrade setting a target price for the stock of $5. That came from H.C. Wainright and clearly juiced Plantin’s stock performance – jumping to 85 and even 90 cents on the back of it.
There has also been an announcement that the company has been granted the next stage of a patent process on a part of the treatment suite they are developing.
The real explanation of the price movements in the Plantin stock price is surmise and speculation about the future of the company. Of course, the reason prices move always is because people change their minds and buy and sell accordingly. But here it’s more evident. There is no specific news handing out a hard fact which can then be traded upon. It is other people's opinions of what the news might be.
As with all pharmaceutical stocks this speculation is about how well the treatment is going to work, what will be the results of trials, and so on. From which it is possible to gauge the likelihood of FDA approval the size of the addressable market and so on. Without hard facts at a number of stages in that calculation – how much revenue will there be? – it’s not possible to come to a final answer. So, the stock price is volatile as different assumptions are made in the chain of reasoning and thus coming to a very different answer.
After all, if it were obvious that the price will be $5, as with the analyst report, then it would already be $5. That it might not reach that price is the reason it hasn’t. Markets are, after all, forward-looking and things that will happen are already priced in.
What this means for the Palantin stock price is that as opinions change – often on social media, as is happening here and now – then the valuation will change to reflect that balance of opinion. There’s an inherent volatility in the price of a company at this development stage – Palantin is likely to continue to have a rapidly changing stock price as a result.
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Tim Worstall is a freelance writer specialising in economics and the financial markets.