The Tricida Inc (NASDAQ: TCDA) stock price rallied 39.77% despite the company filing for chapter 11 bankruptcy protection on January 11, 2023. The move triggered renewed retail investor buying, similar to a short squeeze.
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After filing for chapter 11 bankruptcy protection, Tricida received a delisting notice from the NASDAQ and indicated that it does not intend to appeal the decision. Therefore, we expect the company’s shares to be delisted from the exchange, yet people are still buying.
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Given the company’s dire prospects, it is clear that most investors buying now are not interested in its prospects, which are almost non-existent at this time, they are more interested in bidding up the price to force short sellers to cover their positions.
In addition, Tricida stock’s low price makes it quite accessible to retail traders who can establish significant positions in the company. For perspective, over 15.45 million TCDA shares had changed hands during the premarket session.
The pharmaceutical company has been working on a drug candidate to address a significant unmet need in treating patients with metabolic acidosis and chronic kidney disease (CKD). However, the recent bankruptcy filing could halt these programs if the company is liquidated.
Alternatively, another firm could show interest in acquiring the drug candidate for a specific amount, which could help Tricida compensate some of its creditors.
The next meeting between the company and its creditors has been set for February 15, 2023, after the first-day hearing was held on January 13, 2023.
Meanwhile, I wouldn’t touch TCDA stock with a ten-foot pole as a value investor, given that any gains made now are not backed by anything tangible, and some investors will be left holding the bag (useless shares).
*This is not investment advice.
The Tricida stock price.
The Tricida stock price rallied 39.77% to trade at $0.1852, from Tuesday’s closing price of $0.1325.
eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk.