Joe Campbell Takes Massive Loss After KBIO Soars in Afterhours Trading
Earlier this week, failed biotech firm KaloBios Pharmaceuticals, Inc. saw their shares skyrocket in afterhours trading after Martin Shkreli (yes, that Martin Shkreli of Turing Pharmaceuticals fame) took a majority stake in the company.
Shares of KaloBios Pharmaceuticals had been trading at around $2 per share prior to the announcement after the company announced its intentions to wide down operations and liquidate its assets. The company had a few drugs in the pipeline but was running out of cash, so they decided to pull the plug.
Martin Shkreli, who is affectionately known as the "most hated man on the Internet", saw something in the company and elected to purchase a majority stake in KBIO. This announcement came in afterhours trading, and if you were short, you were likely absolutely killed on your position, especially if you weren't watching.
This is what happened to Joe Campbell, who admittedly started trading just a few short months ago. Campbell, for some reason known only to him, elected to plunk some of his $37,000 in his Etrade account into a KBIO short position. Shorting a biotech penny stock - I mean, what could go wrong?
Campbell learned a very hard lesson as shares of KBIO soared as much as 1,000% overnight. Campbell, who was reportedly in a meeting when the frenzy took place, was forced to call Etrade after a friend informed him that shares of KBIO had skyrocketed following the Shkreli announcement. Campbell called Etrade and his position was liquidated at around $18.50 per share.
The damage to Campbell's account was severe, as not only did he lose the $37,000, but he was now $106,445.56 in the hole. You can have stop losses on your positions, but they won't work in afterhours trading.
So Joe Campbell, who was now looking a six figure bill in the face, did what anybody would do in this day and age - beg for money on the Internet. Campbell decided to set up an account on Gofundme and has actually collected over $5,000 as of this moment. Campbell has said that the money will go straight to his Etrade debt.
The lesson from all of this - if you plan on shorting a microcap biotech stock, you are probably going to have a bad time.
Source: Marketwatch.com - Help! My short position got crushed, and now I owe E-Trade $106,445.56
Filed under: General Knowledge