Basically the company was about to release the findings from a key clinical trial. The stock price would either soar or it would flop.
Tuesday 12pm * stock price is $25
Tuesday 12pm - 12:27pm * massive wave of selling starts the price of the stock dropping
Tuesday 12:27pm - exchange halts trading at $11.81
Mind you, at the exact same time as this was happening, the company was releasing very positive clinical trial data.
So what happened?
The guess is that some large trader did some investigating and found out that a lot of people had stop-loss orders on the stock. The trader slowly accumulated a large position, then rapidly sold off shares right before the announcement.
This caused the stock price to drop, which initiated a number of stop loss orders, which further eroded the stock price. Since it's a small company with a pretty small float, it doesn't take much volume to really swing the price.
The trader then bought back a number of shares (at a very reduced price).
http://pipeline.corante.com/archives/2009/04/30/dendreons_st...
Basically the company was about to release the findings from a key clinical trial. The stock price would either soar or it would flop.
Tuesday 12pm * stock price is $25
Tuesday 12pm - 12:27pm * massive wave of selling starts the price of the stock dropping
Tuesday 12:27pm - exchange halts trading at $11.81
Mind you, at the exact same time as this was happening, the company was releasing very positive clinical trial data.
So what happened?
The guess is that some large trader did some investigating and found out that a lot of people had stop-loss orders on the stock. The trader slowly accumulated a large position, then rapidly sold off shares right before the announcement.
This caused the stock price to drop, which initiated a number of stop loss orders, which further eroded the stock price. Since it's a small company with a pretty small float, it doesn't take much volume to really swing the price.
The trader then bought back a number of shares (at a very reduced price).
The stock was back over $25 the next day.