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Palatin Tech Should Rise 2,500% This Morning – No, Palatin, Not Palantir

Tim Worstall
Tim Worstall trader
Updated 31 Aug 2022

Trade Palatin Technologies Stock Your Capital Is At Risk

Key points:

  • Palatin Tech stock should rise 2.500% at market open, all being well
  • Do note this is Palatin, not Palantir
  • The price change will be nominal – the real price change will be the variance from 2,500%

Palatin Technologies (NYSE: PTN) stock should rise 2,500% at market open this morning. Do note that this is Palatin Technologies, not Palantir Technologies (NYSE: PLTR). We don't want a repeat of that confusion between Zoom Technologies (OTC: ZOOM) and Zoom Video Communications (NASDAQ: ZM) when the OTC stock leapt 50,000% (really, fifty thousand percent) as people piled into the wrong one.

Here at Palatin the aim is to make sure that PTN stock isn't kicked off the NYSE. For if you don't maintain a minimum offer price of $1 for your stock then you can – and in time will – lose your listing and be relegated down to the OTC markets. The reason for this is simply fashion, nothing else to it at all, but it's such a long running fashion that it has become not just custom but the rule.

For some reason lost back in those mists of time New York just thinks that a solid and dependable stock price should be in the $10 to $100 range. Below that is a bit risky and below a dollar is – as it is by definition – a penny stock. Penny stocks are where bad people go to play games with investors so they're not allowed on the main markets. That this is purely fashion is shown by the fact that London thinks that £1 to £10 is that same marker of stability and solidity. Which is why ADRs of London stocks are so often 10 pieces of the London stock – to be in that Goldilocks price zone for both markets.

Palatin Technologies stock price
Palatin Technologies stock price from IG

Also Read: Five Best Pharmaceutical Stocks to Watch in 2022

Palatin Tech was in significant danger of breaching this rule. So, to maintain the NYSE quote a reverse stock split was undertaken. For every 25 shares that used to exist there would now only be one. This change should take place at the open of the main market this morning. Thus last night's $0.18, 18 cents, stock price should be 25 times higher, or $4.50. A 2,500% stock price rise for PTN.

This is, of course, a purely nominal price change. The value of Palatin by market capitalisation should not change, nor the value of any particular holding in PTN. It's just that change in the number of pieces of stock in issue, leading to a different price for each piece of paper, but no real price change at all.

On the other hand, we can measure whatever the real price change is by looking at how far it deviates from that predicted 2,500% rise.

There's one more piece we can add here. Which is that Palatin, as a biopharma company still in development stage, needs capital. Which is why the effort to maintain the NYSE quote, that's a more liquid place to raise more capital than the OTC markets. At which point a very slight worry in the details. While they've cut the number of shares in issue they've not cut the number they may issue without further authorisation – that remains at 300 million. So there's room for an awful lot more dilution yet.

Tim Worstall
Tim Worstall is a freelance writer specialising in economics and the financial markets.