What factors can cause a sizable difference between "bid" and "ask" prices on a stock?

Question

I have this stock on which the last price (at market close) was USD $9.10/share.

However the last bid on it was $8.80 (5) and the last ask was $10.75 (94). The amounts in parenthesis show the number of shares at the indicated price.

The traded volume on this stock today was about 158K. The market capitalization of the company is about $350 Million. The stock has increased in value since beginning of this month.

Questions:

1. What factors (besides traders willingness to make a profit) can cause a nearly $2 spread between the "bid" and the "ask" prices?
2. Could this spread indicate a reversal of the uptrend value of this stock?

Answer 1

Such excessively wide spreads arise because as market makers and specialists leave for the day, liquidity becomes thin, even non existent.

As an example, consider a stock like Minerva Neurosciences (g). At 4 PM today, its closing NBBO was:

$9.10 x $9.15 with a size of 48x107 with a last trade at $9.10

Within 1 minute, its size had dwindled to 2 x 4 (47x107, 46x106, 26x12, 25x12, 25x11, 13x7, 2x4)

By 5 PM, NBBO was:

$8.95 x $9.30 with a size of 1x1

By 7PM, NBBO was:

$8.80 x $10.75 with a size of 5x1

No trades were occurring, just bids and offers being pulled for the day.

The short answer is that if a stock has a wide bid/ask spread during after hours, then there is little, if any, after-hours trading taking place. Such a wide B/A spread is meaningless and implies nothing.