Why Did Protalix's Stock Offering Announcement Boost Shares?

Shares of Protalix BioTherapeutics (PLX), the Israeli producer of recombinant therapeutic protein through plant cell expression, jumped by 44% on Wednesday following an announcement that the company is planning on selling shares to the public.

The company's board of directors approved the stock offering, but did not disclose the anticipated date of the filing, the expected price nor the overall size of the deal. Yet, investors welcomed the news as volume was 8x the 3-month daily average.

Not surprisingly, shares dropped more than 20% in after hours trading. I say not surprisingly because who buys shares of a stock on news of a public stock offering, without first knowing the date and more importantly, the price of the offering? I am surprised that the stock took off the way it did in the first place, so the after-hours drop was not a surprise.

Protalix has a market cap of $1.95 billion, so this is not a case of a penny stock gone wild. In my opinion, it seems that someone, somewhere knows exactly how big the deal will be, and traders just went along for the ride.

Comments

[H S]

$2 billion mkt cap for a phase-2 company
low volume
no insiders buying
no inst. holders

this seems like a classic pump-and-dump

should be trading in the $2-$4 range, not $30