Little-known biotech company Bone Biologics (NASDAQ:BBLG) is getting a lot of attention on social media, and its share price is soaring as a result.
After jumping 10% yesterday, Nov. 1, to $5.48 a share, BBLG stock skyrocketed 64% in after-hours trading, rising all the way to $9 per share overnight. In pre-market trading today, the share price is up 31% to just over $7. The sharp move higher seems to be driven by two factors: the company’s recent listing on the Nasdaq stock exchange and the revelation that billionaire businessman Don Hankey holds a 70% stake in the Burlington, Massachusetts-based company.
What Happened With BBLG Stock?
Bone Biologics is a relatively small biotechnology company that focuses on bone diseases such as osteoporosis and osteoarthritis. On its website, the company claims to be working on treatments that lead to bone regeneration. The company held its recent public offering on the Nasdaq on Oct. 13 and its first day of trading there ended with BBLG stock at $4.58 per share. The share price was hovering around $4.50 until yesterday when it popped 10% after the Don Hankey revelation.
Don Hankey is a 78-year-old businessman who made billions of dollars from subprime car loans, which are high-interest loans made to consumers who have suboptimal credit ratings and are considered risky borrowers. Hankey is a rather low-profile billionaire. However, as of September this year, his net worth was estimated at $5.5 billion and he has a reputation for being a shrewd businessman. Hankey took over a lone Ford (NYSE:F) car dealership from his father in 1972 and built it into the Hankey Group, whose primary business is now Westlake Financial Services that makes subprime car loans.
News that Hankey is a major investor in Bone Biologics has been enough to make the biotech company a trending topic on Twitter (NYSE:TWTR) and other social media sites and pushed BBLG stock sharply higher as a result.
Why It Matters
That Don Hankey is a majority shareholder in Bone Biologics provides a vote of confidence in the fledgling company that, until yesterday, was trading as a penny stock. While the average retail investor may know little about Bone Biologics, the fact that an accomplished businessman such as Hankey has a controlling stake in the company tells them that it must be a worthwhile investment. Investors tend to follow a herd mentality, particularly online, and the social media chatter surrounding Hankey’s holding of BBLG stock is leading other people to buy shares.
However, there is a risk that Bone Biologics could end up becoming a meme stock. The social media hype and comments, along with the astronomical jump in the company’s share price, have the telltale signs of a meme play. If this is the case, BBLG stock’s run higher could be short lived and investors run the risk of seeing the share price fall just as quickly as it moved higher. On several social media sites, warnings are appearing that Bone Biologics’ share price is likely to crash in the coming days.
What’s Next for Bone Biologics?
Bone Biologics appears to be a legitimate biotechnology company with a niche focus on bone repair and regeneration. But the company’s surging stock price should be of concern to investors. Keep in mind that Bone Biologics has been traded on the Nasdaq for less than a month and it has yet to report any quarterly financial data for investors to assess. Rather than grabbing BBLG shares, investors should be careful. Rushing into a skyrocketing stock could lead many people to get hurt when the share price crashes. Keep an eye on Bone Biologics stock, but don’t buy shares at the opening bell this morning.
On the date of publication, Joel Baglole 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.
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