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Comment by chvid | Hacker News Reader

What is worse this is a public traded company:

https://markets.ft.com/data/equities/tearsheet/summary?s=OMY...

Up more than 200% today!!!

Also mentioned in the article: "Stock market rules mean Synairgen is obliged to report the preliminary results of the trial."

Which rules exactly? Plenty of of publicly traded companies keep R&D projects secret...

There comes a time when you can no longer keep something secret even if you try. The next step in getting this approved requires that some people be told about this that you must assume will not keep it secret (ie a journal that goes to libraries for anyone to read). Thus at this point they have to tell everyone who might invest, that way they can't be accused of telling their friends.

We're specifically talking about clinical trials.

To be fair the stock wasn't worth much before today... It's far easier to get big sounding percentages with small numbers.

The price of a stock doesn't matter. A company with 100'000 shares that are worth $100 isn't worth more than a company that has 10 million shares that are worth $1.

But I a dollar stock is more likely to triple than a $100 stock.

As you say, it's the total market cap that matters in how much value a share is actually worth. But there is a floor to how much an individual share can be sold for before they de-list it entirely, resulting in a lot of volatility for very-low-priced stocks.

When a company on the brink gets a bit of good news, it's easier for it to triple in value than a company with an existing, stable business. Such things can suddenly turn into big, quick wins for the people who were there before the news. (People investing after the news are pretty much just suckers, though market irrationality still lets them sell at a profit to even further suckers.)

Well technically dmix says worth not price which to me is more akin to market cap than price.

That's also how I intended it.

What do you mean? The specific price per share doesn’t mean anything. It’s just a number calculated from value of the company and number of shares.

If I get my first sale today for $1 and then tomorrow make a sale for $3 I can say my daily revenue is up 200%.

The impressiveness of growth percentages drops off when your base is small.

The argument you’re looking for is that the market capitalization is small. The stock price itself is irrelevant and depends on units of stock extant.

If Apple does 1:100 split and their shares will have new price of $3.89, will that somehow make Apple stock more volatile?

The company was worth £50m yesterday, that's not chump change

Still, if you put 100k, you get 200k back.

And just as quickly the other direction, which is the risk with low value/penny stocks and high volatility without a strong base.

Still I'm not suggesting anything is atypical here (besides BBC declaring it a "breakthrough"). If anyone 'deserves' to be well capitalized it's companies doing research in this email to area with real clinical trials. It's hardly the last time people will gamble on preliminary results even beyond COVID, googling "preliminary results" will provide plenty of evidence.

"research in this email to area"

typos? voice transcription errors? no idea what you intended to convey here...

If you use leverage and take options you can put in 1k and get 200k back.

A large company is guaranteed to have been analyzed very carefully by skilled analysts. If you have a small sum to invest, a big risk appetite and you are willing to do your homework then you are better off trying your luck with understudied companies in inefficient markets.

It follows from the theory of comparative advantage. The big players can extract a lot more than you can from big companies but only a little more from the small ones.

Not really. On paper it works, but in practice your position is large enough relative to the whole that your activity is affecting the price. You won't be able to buy as much as you think for that price because there are not enough sellers, and even if you did, your act of selling drives the price down. Big players worry about this all the time. Small players can safely ignore it. The line between big and small depends on the company in question.

I realize that you were talking about options which have slightly different rules, but overall the same applies, in ways adjusted for the rules of options. (I don't know those rules well)

Options in such stock even if it exists will not be liquid enough you can do that easily . That is you won’t find counter parties for that kind of option for this type of stock easily .

This sounds just like a great Bitcoin opportunity I saw recently in a tweet from Elon!

Before tax, also the long train is past, time to short it for the week.

What?

https://en.wikipedia.org/wiki/Low_base_effect

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