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 Star Scientific (Nasdaq: CIGX  ) fell 12% today, continuing a downward trend.

So what: Star Scientific, a tobacco curing technologist, started to fall off its high horse on Thursday after a long run-up, and it looks like the momentum continues today. There wasn't any significant news driving trading, but volume has again reached 6 million shares, which used to be off the charts for this extra-volatile stock.

Now what: Fellow Fool Brian Pacampara warned of buying into last week's sell-off, which looks like wise advice after another long fall today. There may be long-term drivers that will help the stock, but in the short term, this stock is a traders' dream, and investors should tread carefully. After all, the company doesn't have any significant revenue -- only the hope of products that show promise.

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

Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

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Read/Post Comments (2) | Recommend This Article (4)

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  • Report this Comment On April 12, 2011, at 6:57 AM, InvOb wrote:

    I would agree with you that until there is verifiable, consistent revenue that the flight to over $5 was probably a bit overdone, HOWEVER, there's one thing you haven't even mentioned here, so I'll ask the question...

    I'm wondering what you think the relationship is between this massive sell off and the fact that the Regulatory Circuit Breaker was activated last Thursday and again yesterday?

    After all, many think there is a difference between a true sell off on a company that ran without any news at all and a company being targeted in a true short attack by pools of money much larger than anyone can really fathom.

    Your thoughts would be greatly appreciated.

  • Report this Comment On April 13, 2011, at 2:38 PM, InvOb wrote:

    OK Travis, it's now been over a week and the Regulatory Circuit Breaker has now been activated for the 3rd day out of the last 6 or 7.

    How does this impact your overall perception of the company?

    Yes, the revenue story is still needed versus your above thesis, but it would be interesting to see your perception of your commentary above taking consideration of the RCB issue at hand as well.

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