Mind Medicine (MindMed) (MNMD 0.94%) stock is absolutely crushing it on Thursday, with shares soaring 45.4% as of 11:20 a.m. ET after rising as much as 77.3% earlier in the day. The company hasn't announced any new developments since last week. So what's behind the huge gain today?
Probably the most likely explanation is that investors are reacting to reports by the Financial Times and other online publications about 20-year-old Jake Freeman. The reports focus on how Freeman and his family made $110 million in one month trading Bed Bath & Beyond (BBBY) stock.
Freeman's uncle, Scott Freeman, was a co-founder and executive with MindMed. Now a company founded by Freeman, FCM MM Holdings, is pushing MindMed to make changes that could reward shareholders. Some appear to be betting that MindMed could have a similar trajectory to Bed Bath & Beyond's.
It's possible that the pressure on MindMed could result in substantial moves that help the company's investors. In particular, FCM MM wants the company to refocus on its core drugs in development, reduce cash burn, and scrap a stock offering. However, there's no guarantee that any of this will happen or that the stock will continue today's momentum.
Jumping on the bandwagon of traders betting on MindMed's short-term movement is an inherently risky proposition. What goes up quickly can come down even faster.
There are two significant things to watch with MindMed. The company's board of directors approved a 1-for-15 reverse stock split that's scheduled for after market close on Aug. 26, 2022. This move will enable MindMed to comply with Nasdaq's minimum share price requirements.
More importantly for MindMed over the long term, in Q3 the company plans to start patient dosing in a phase 2b study of MM-120 in treating general anxiety disorder. A phase 1 investigator-initiated trial of MM-402 is also on track to begin in Q3.