Citron: This Biotech Stock Will Fall 86%

PTE stock is getting slaughtered, and option bears are buying puts at a rapid-fire rate

Oct 18, 2018 at 2:14 PM
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The shares of PolarityTE Inc (NASDAQ:PTE) are getting slaughtered today, after Citron Research issued its "most damaging report to date." Specifically, the notorious short seller said the Food and Drug Administration (FDA) has proven a "stock scheme," and claims the company's "groundbreaking technology" is "controlled [by] a nefarious group of stock promoters who have since all been sued by the SEC for fraud." Further, Citron claims PolarityTE "lied to investors about having a patent," and issued a price target of $2 for PTE shares -- an 86% discount to yesterday's close at $14.60.

PTE stock was last seen 13.32% lower to trade at $12.65, and earlier touched a new annual low of $12.10. The shares have surrendered more than half their value since trading north of $30 in late August, pressured lower beneath their 10-day and 20-day moving averages. Further, PolarityTE stock is now trading south of the $16 level, which acted as support several times in 2018.

PTE stock chart oct 18

With PTE on the short-sale restricted list today, bears are taking to the options pits. So far, roughly 7,424 puts have crossed the tape -- 17 times the average intraday put volume, and already four times the previous annual high of 1,709 puts traded on Sept. 26. Most of the action has transpired at the October 12.50 and 15 puts, where it seems traders are buying the options to open. By doing so, they expect PTE stock to extend today's slide through tomorrow's close, when the front-month options expire.

Should the security continue its sell-off, a round of negative analyst attention could exacerbate PTE's woes. The only two analysts covering the shares deem them worthy of a "buy" endorsement, leaving the door open for a downgrades or bearish initiations. Meanwhile, the consensus 12-month price target of $65 is more than five times the equity's current price.

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