Tesla’s Rising, but This Nasdaq Biotech Stock Got Absolutely Crushed Wednesday | The

The stock market took a breather Wednesday morning from extreme volatility in both directions over the past couple of days. After a huge jump on Tuesday, Nasdaq Composite (NASDAQINDEX:^IXIC) futures contracts eased lower by 36 points to 15,944 as of 8:30 a.m. ET Wednesday in premarket trading.

Tesla (NASDAQ:TSLA) is a name that’s on many investors’ watch lists, and it’s always been a volatile stock. The electric vehicle (EV) pioneer has hit the skids in recent weeks, but this morning, shareholders are seeing a reason for hope that the worst of the recent pullback is behind them. Meanwhile, though, another Nasdaq-listed stock is getting positively hammered, with bad news that’s calling into question its entire future. Below, you’ll learn more about why Tesla bears might be going back into hibernation, and then you’ll see more about the biotech stock that’s plunging Wednesday morning.

An end to selling?

Shares of Tesla were up more than 3% on Wednesday morning. The move came following comments from CEO Elon Musk regarding his holdings in the EV manufacturer.

Image source: Tesla.

Over the past several weeks, Musk has been vocal about his substantial selling of Tesla stock. After doing a public poll of his fans, Musk set a plan to sell 10% of his shares. The executive followed through with massive transactions that ended up totaling roughly 13.5 million shares — or around $13 billion at current prices.

However, Musk said in an interview that he has now sold enough stock to reach his goal. That has some investors believing that the selling pressure from Musk’s transactions is now over, and therefore the share price could move higher from here.

Tesla investors have to remember that shareholders approved a truly massive compensation package that includes generous equity-linked awards for Musk upon reaching certain business and market capitalization milestones. If the Tesla CEO so chooses, it’s entirely possible that he could replace all his sold stock through future awards and options exercises and pocket billions in the process — or keep selling in the future.

Allakos hits a roadblock

Meanwhile, shares of Allakos (NASDAQ:ALLK) crashed on Wednesday morning, falling 87% as of 8:30 a.m. ET. The biotech company released late-stage clinical study results that left executives and investors disappointed and uncertain about Allakos’ future.

Allakos’ data from a pair of late-stage trials of lirentelimab in patients suffering from a set of rare chronic eosinophilic gastrointestinal immune-system diseases was mixed. On the positive side, it showed that lirentelimab met histologic primary endpoints in demonstrating statistically significant changes in the number of patients achieving certain key eosinophil count levels in their gastric or duodenal tissue.

However, Allakos didn’t see a statistically significant improvement in symptoms reported by study patients. One study showed that a score that takes six different symptoms into account didn’t produce meaningful improvement compared to placebo over 23 to 24 weeks, while the second saw similarly weak performance on the patient dysphagia symptom questionnaire, which measures patients’ difficulty swallowing foods or liquids.

Allakos admitted that the results were surprising, but Chief Medical Officer Craig Paterson said that the company will look at the data and consider other ways to move forward in potential treatments including atopic dermatitis and asthma, among others. Nevertheless, investors were counting on positive results, and that explains why the stock has fallen so hard.