Something put a rocket under the share price of the smartphone maker on Monday night.
Trading volumes were also heavy.
There was also unusual activity in Palm’s call options.
From Schaeffer’s Options Centre (see the last entry).
So what might have caused this?
Reuters offered the following interpretation.
Shares of Palm Inc (PALM.O) closed up almost 14 percent on Monday after a late afternoon spike as investors anticipated a successful secondary stock offering, one analyst said.
Avian Securities analyst Matthew Thornton said the stock was likely buoyed by rumors that Palm’s recently announced secondary offering would price on Tuesday.
He said that move was likely exaggerated because of the company’s high percentage of short-seller investors, which bet on a share price decline but move to cover themselves if they see signs that a stock will rise instead.
“With a high short interest it doesn’t take much,” to move Palm shares, Thornton said.
And Palm is certainly an illiquid stock; Bono’s Elevation Partners owns a 33 per cent stake.
However, there was another theory doing the rounds last night – rumours of predatory interest from Nokia.
Related link:
Palm posts narrower-than-expected loss – FT