Avid Bioservices Inc (CDMO)

[patientlywaiting]

"Biotech stocks are particularly vulnerable to manipulation by the shorts. They tend to be small, with low share prices and relatively few shares actively traded. And because of the high risk involved — relatively few biotech companies ever succeed — share prices tend to be volatile, easily moved by rumors and news of regulatory action.

These characteristics make it easy for a handful of hedge funds to anonymously drive down the price by selling borrowed shares into the market at the same time, creating a self-fulfilling momentum that scares off other investors. Even when they can’t get ahold of enough borrowed shares, they might sell the shares anyway and simply fail to deliver them three days later when they are due. That’s known as a “naked” short, and it’s illegal."