Shares of Virax Biolabs (NASDAQ: VRAX) dropped 74% on Friday. The stock closed on Thursday at $20.80, then opened on Friday at $19.92 before climbing to its all-time high of $29 shortly before noon. Soon after that, it began falling and dropped to a low of $9 around 2 p.m. Then, shortly before the market closed, it fell again to $5.40 a share. So, for the day, the stock was initially up 39.4%, and by the end of the day, it was down 74%. The volatility led to the NASDAQ halting trading in the stock several times during the day.
The biotech company, which specializes in the detection and treatment of viral diseases, just began trading on the NASDAQ on July 21 after an initial public offering (IPO).
The share price of the IPO shares was $5, but the IPO didn't fully finish until July 25. Owners of those shares, once they hit $29, began to dump them, doing the classic "sell on the good news" method. That sent the stock into a tailspin amid a flurry of rumors. When it was revealed that the company had told the SEC its annual report, due July 31, would be late by up to 15 days, that added further fuel to the fire.
Earlier this week, Virax said that it had begun distribution of its monkeypox and Varicell-Zoster Viruses PCR detection kits in Europe. On July 23, the World Health Organization declared monkeypox to be a global health emergency, saying more than 16,000 cases had been reported across 75 countries and territories.
As a newly traded company, it may take some time for the biotech stock to find a truer level, so it's likely to stay volatile for a while. There's little question the trading of the $5 shares helped bring the price down, but Virax hasn't issued a quarterly report yet, so it's hard to say what the stock is worth.
The news regarding its PCR tests is certainly positive, and Virax learned through its COVID-19 tests that quick action is needed when an outbreak occurs to have a more viable product.