PreMarket Prep Stock Of The Day: JanOne

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

There are many examples of excessive speculation in the markets. However, there isn't one more egregious than the price action in JanOne Inc. JAN,  which is the PreMarket Prep Stock of the Day.

The Company: JanOne is focused on reducing opioid addiction by finding treatments for conditions accompanied by pain and bringing to market drugs and therapies with nonaddictive, pain-relieving properties. The company operates in three operating segments: biotechnology, recycling and technology.

It derives the majority of revenue from the recycling segment, which provides turnkey recycling services for electric utility energy efficiency programs.

The Mix-Up: In 2020, there has been a massive increase in retail trading.  As a result, the after-hours segments on CNBC's "Closing Bell" and Jim Cramer’s "Mad Money: have set the stage for some unruly price action in some of the issues being discussed.

After the close Tuesday, Dan Niles, founder and portfolio manager for the Satori Fund, was previewed to discuss the gaming stock Gan Ltd GAN from a bullish perspective.  

Apparently, some aggressive and non-attentive traders mistakenly thought that it was JanOne that was going to be discussed by Niles, incorrectly hearing a "J" instead of a "G." 

Mysterious Price Action Tuesday: Who made the initial assumption that JanOne would be featured on the show and when may truly never be known. Perhaps it was during the day on Tuesday, when the network previewed Niles' appearance.

The price action in the issue during the two previous sessions is puzzling.  

After trading only 46,000 shares Thursday, the volume in JanOne ballooned to 1 million on Monday in a rally from $3.94 to $4.26.  On Tuesday, it traded an astounding 5.1 million shares, moving up from $4.26 to $5.08. It should be noted that its 50-day average volume is 286,000, which has ballooned due to the price action this week. 

Over this same time period, there were several sessions when the issue traded less than 100,000 shares.   

After-Hours Buying Frenzy: What took place in the after-hours session Tuesday is even more befuddling. When Niles was appearing on the broadcast to discuss Gan Limited, the issue more than doubled from its closing price.

By 4:45 p.m., on heavy volume, the issue exploded to $9.60, which coincided with its April 2019 high ($9.56) and reversed course.  

The issue retreated to end the after-hours session at $8.40.

Jan Stays Elevated Premarket Wednesday: Long after it was evident that the company was not discussed on "Closing Bell," a strong bid still persisted in the issue. As late as 7 a.m. Wednesday, it briefly traded up to $9, but there have been step-down sellers ever since. 

PreMarket Prep's Take: When the issue was being discussed on the show Wednesday, it had drifted back down to the $7 area.

Co-host Dennis Dick gave his explanation for what had taken place as he was watching CNBC.

“Who knows where it goes. I am not going to short it, but if I was long, I would sell it.”

Jan's Price Action In The Regular Session: The issue’s opening price Wednesday ($6.59) was only 16 cents off its high for the session of $6.75. The stock made new lows before ending the session at $5.44.

JanOne shares were trading down another 11.03% at last check Thursday at $4.84.