Revelation Bio Stock Leaps 130% – Is The SPAC Stock Being Placed?

Revelation Biosciences (NASDAQ: REVB) stock is up 130% premarket this morning on no really obvious news releases. This follows a 27% price rise in REVB stock yesterday. This is, of course, nice for those stockholders who were in the SPAC process, who have lost 93% of their money since the combination back in January. The question is, well, what's driving this stock price rise? There is no obvious news release to explain it, so we'll have to make some surmises.

Revelation is a clinical-stage biopharmaceutical company focussing on immune system therapeutics and diagnostics. So, there's significant effort and business opportunity in covid, influenza, rhinosinusitis and so on. So far so good, although there doesn't seem to have been any grand announcement about anything from the FDA to explain suh a stock price rise.

We might be able to explain the 90% plus stock price fall though. For Revelation came to market just back in January as a result of a SPAC deal. Just that 6 months back there was more excitement about SPACs and also about covid and treatments for it. So, the deal could be got away but given the subsequent stock price collapse perhaps it was got away at too high a price.

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As we say, there's no obvious piece of news to explain today's jump in the stock price at REVB, nothing concerning the business, the FDA, new customers. So, we have to make a supposition or two here. And it's possible that this is to do with the SPAC agreement itself.

As is normal in a SPAC agreement the people who originally listed the cash shell upon NASAQ gain a certain portion of the stock once the merger deal is done. That's their fee for having done the work and organisation. They're usually locked in for 6 months after the completion as well. So, SPAC merger back at the beginning of the year we're around the middle of the year, yes, we can see that this could produce some volatility in a stock price. Some decent portion of stock is about to come out of lockup that is.

We've also had, a month back, the announcement from Revelation that some 15 million shares might some onto the market – those very SPAC lock up stocks talked about above. But why would this then lead to a jump in the REVB stock price?

The answer is we don't know and must speculate One such speculation being that one of two things has happened, Either some of those selling stockholders have agreed to keep some or all of their stock. Or, alternatively, it's all been sold into long term investor hands and is therefore off the market the other way. A large overhang of stock just waiting to be sold will depress a price, the news that it is now either not to be sold, or has already been and placed, can boost such a stock price.

As to trading this, it's probably best to work out exactly what is really causing the REVB stock price movements before making a decision.