Last week, predictions indicated that the SPAC bubble that had overtaken the U.S. stock market early in 2021 had finally burst. Today, though, saw one recent SPAC skyrocket in value when eFFECTOR (NASDAQ:EFTR) stock rose by as much as 88%. The stock made its market debut on Aug. 26 after eFFECTOR merged with Locust Walk Acquisition Corporation.
What Has EFTR Stock Done Today?
Based in San Diego, California, eFFECTOR Therapeutics describes itself as a “clinical-stage biopharmaceutical company focused on pioneering the development of a new class of oncology drugs known as selective translation regulator inhibitors (STRIs).”
According to founder and CEO Dr. Stephen Worland, the company is “advancing the development of STRIs with the potential to target a central node that drives multiple disease processes simultaneously, including cancer’s inherent escape mechanisms”
And importantly, to the company says key rollouts are not far away. A statement released prior to the merger promises “a strong pipeline with multiple near-term data readouts.”
Even bearing that, EFTR stock has declined steadily since its market debut, falling by more than 49% in just over one week. This morning, the stock began to rise and climbed steadily until it peaked at roughly 2:00 p.m. rising by over 97%. At market close, shares had gained 49.9% on the day.
The Turbulent World of SPACs
The two companies first began plans for the merger in May 2021. When the deal was finalized almost three months later, the stock of the acquisition company enjoyed premarket surges following the news of the merger. As soon as EFTR stock made its debut, though, it was quick to begin a pattern of decline.
This came at a time when many SPACs were struggling, causing analysts to wonder if the SPAC frenzy was finally over.
Companies that had made their market debuts in summer 2021, such as Lucid Motors (NASDAQ:LCID) and Hippo Holdings (NYSE:HIPO) had performed poorly since their SPAC mergers and were facing the consequences of PIPE investors offloading their shares at the first possible opportunity.
Some experts wondered if the companies had gone public before they were ready. EFTR’s recent upward trajectory, though, has given analysts cause to reconsider this. They are not alone. Today also marked a five-day high for the California-based Hippo Holdings whose stock has risen by nearly 27% on the day after negative reports and projections last week.
What Will Effect EFTR Stock Next?
SPACs are volatile in nature, but it seems as though right now, that volatility may be about to benefit investors as it did earlier this year.
Plenty of uncertainty still resides over SPACS as a whole but it is clear that eFFECTOR Therapeutics is a company with plenty of potential. Some companies need time to establish their presence on public markets, particularly if they debuted at a fairly early stage with little name recognition.
For EFTR stock, that could easily be the case. The company’s rocky start is not ideal for investors but there is plenty of reason to foresee growth in the months to come. Like Lucid Motors, it has pipelines full of projects, and while cancer treatments may not be as exciting to consumers as redesigned electric vehicles, they are fundamentally important.
If eFFECTOR Therapeutics can affect the ways in which cancer is treated even slightly, it will yield noteworthy results for both investors and patients alike.
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
