Today, perhaps the biggest head-scratcher in the market is Nano Labs (NASDAQ:NA). This integrated circuit diagnostic chip maker company only debuted earlier this month. However, since going public, NA stock has lost a tremendous amount of value. That is, until today’s more than 50% rise.
This move brings Nano toward the higher end of its trading range over the past few weeks. Of course, the time period following an initial public offering (IPO) can be volatile. However, this sort of volatility is worth parsing out.
Last week, Nano Labs announced that it had received a letter from the Nasdaq claiming the company was not in compliance with its guidelines. Specifically, the exchange is focusing on the fact that Nano did not raise more than $25 million with its IPO. That puts NA stock at risk of delisting as a result.
Let’s dive into what may be driving investor interest in Nano, given these concerns.
Why Is NA Stock Pumping Today?
Interestingly enough, most other chip stocks are down today. So, there’s really no macro factor that investors can point to for today’s rise. Rather, it appears that some investors may be considering the fact NA stock could be taken private in short order.
Private valuations have also taken a hit of late. However, should another competitor come with an offer, there may be potential for a near-term bounce.
There are various reasons why speculators could view a potential delisting as a good thing. In some offerings, investors in a failed IPO can receive their original investment back. Accordingly, perhaps there’s an angle to be played here with respect to short-term arbitrage.
That said, like other smaller-cap stocks in this sector, there’s higher risk with investing in such a stock — particularly on a notice of potential delisting.
On the date of publication, Chris MacDonald did not hold (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.
