Star Scientific Shares Plunged: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of tobacco curing technologist Star Scientific (Nasdaq: CIGX  ) experienced heavy volatility in Thursday trading on extraordinarily high volume.

So what: Within the first hour of trading, the stock sank as much as 12%, only to quickly recover about half of the loss. At the time of publication, Star Scientific was down 6% on massive volume of roughly 6.5 million shares, versus its average volume of just 1.6 million shares.

Now what: I wouldn't be so quick to buy into today's selloff. Fueled by favorable Food and Drug Administration rulings regarding its smokeless tobacco products, insider buying, and articles suggesting that Star Scientific has "cured Alzheimer's disease," the shares are still up a whopping 120% over just the past two months. But while Star Scientific isn't exactly suitable for risk-averse investors, the recent buzz surrounding the stock, coupled with its beta of more than two, might make it an ideal play for active traders.

Interested in more info on Star Scientific? Add it to your watchlist.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.

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  • Report this Comment On April 07, 2011, at 1:39 PM, fwrobinson wrote:

    I am surprised you didn't mention the underlying reason for the plunge was that Bloomberg posted a FALSE newswire that Star Scientific had failed to meet NASDAQ listing requirements, not withdrawing it until the end of the day. Star reponded with a corresponding release and forced Bloomberg to withdraw it, but the damage was done.

  • Report this Comment On April 08, 2011, at 8:00 AM, RADIOBOSS1 wrote:

    the comment that the sell off was because off bloomberg is off by a day , that was on wed. not thursday and would not explain the selloff

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