What happened

Inovio Pharmaceuticals (INO -2.92%), a DNA-based immunotherapy and vaccine company, is having another wild trading session Tuesday morning. Out of the gate, Inovio's stock shot up by 10.7% on heavy volume. But within a matter of minutes, the biotech quickly reversed course, with its shares now down by 30% as of 10:12 a.m. EDT. 

So what

What's behind this whipsaw action in Inovio's stock? Inovio's shares were up by a stately 327% for the year as of last Friday. Investors were bidding up this tiny biotech in response to the hype surrounding its experimental COVID-19 vaccine, dubbed INO-4800. Specifically, the company previously announced that it had developed a viable vaccine candidate within just three hours of the publication of the virus' genetic sequence. As the world is clamoring for a COVID-19 vaccine, Inovio, in theory at least, may have a veritable goldmine on its hands.

A stock chart drawn in chalk moving up, and then down.

Image source: Getty Images.

Short-seller Citron Research apparently sees it a different way, however. In a tweet yesterday afternoon, Citron called Inovio's claims about developing a vaccine in a matter of hours "ludicrous" and "dangerous." The firm also noted that it believes Inovio's shares will fall back to the $2 range once the hype subsides. That's a harsh call to be sure, but Inovio does have a history of jumping on the bandwagon of these high-profile infectious diseases.   

Now what

What's the best course of action for shareholders today? Inovio's run-up on this COVID-19 vaccine news is probably way overdone. In a best-case scenario, Inovio's vaccine might be ready for the market three years from now, and that's likely an overly optimistic time line. In brief, there's no solid evidence to believe that Inovio will ever financially benefit from its experimental COVID-19 vaccine -- that is, besides some one-time grant money. As such, it might be a wise idea to watch this extremely volatile biotech stock from the safety of the sidelines.