Typically the inventory is surging, however different occasions it’s plunging. If biotech bets are your bag, then try Progenity NASDAQ:PROG>, as PROG inventory is unsafe, unstable and undeniably thrilling.
Progenity matches nearly any definition of a penny inventory: low share worth, low market cap and unstable because it will get. Catch it on the proper time, and you possibly can shortly double your capital.
Or, PROG inventory might go to zero. And as we’ll see, the inventory’s worth historical past reveals a protracted, persistent downtrend.
On the similar time, a Reddit-fueled run-up may be in retailer for Progenity. So, let’s begin with a brief – and admittedly, cringe-inducing – worth historical past of this fast-moving biotechnology inventory.
A Nearer Have a look at PROG Inventory
Going again to the start, Progenity had its initial public offering (IPO) on June 22, 2020. At the moment, the corporate offered roughly 6.6 million shares at $15 apiece.
Just about instantly, the early buyers have been within the pink. PROG inventory dropped to $9 in July 2020, and closed out the 12 months at $5 and alter.
If anybody purchased that “dip,” they most likely quickly regretted their resolution. The Progenity share worth continued its downward slide into 2021, falling beneath $2 in the course of the sweltering summer season.
As I’m penning this in early October, PROG inventory is buying and selling at a stunningly low $1.32. May sub-$1 be subsequent?
Whereas we’re wanting on the information, it must be famous that Progenity’s trailing 12-month earnings per share is -$4.28.
That’s a tough capsule to swallow when the share worth is beneath $2.
It’s true: the quick curiosity in Progenity shares actually doubled from the top of August to mid-September.
Due to this fact, Reddit customers may set their sights on Progenity for a brief squeeze within the close to future. No ensures right here, in fact, but when it occurs, the snap-back impact may very well be highly effective.
All of that being stated, I don’t need anybody to simply purchase PROG inventory with out understanding what the corporate does to earn money.
To place it merely, Progenity offers non-invasive prenatal screening assessments for ladies – or not less than, that was the corporate’s main income supply (I’ll clarify this in a second).
As MacDonald clarified, “These assessments allow users to see whether or not any deformities or abnormalities exist with their unborn kids.”
MacDonald additionally noticed that PROG inventory collapsed by greater than 50% in a single buying and selling session in August. So, what occurred?
First, Progenity introduced a share providing which supplied for a further $40 million in financing.
That inventory providing would undoubtedly carry an inflow of capital to Progenity, however dilution sometimes isn’t seen as factor for long-term buyers.
Altering the Focus
The opposite most important concern was that Progenity introduced final week that it was shifting its focus from prenatal testing kits to the corporate’s biotech pipeline.
This transfer would apparently cut back Progenity’s working expenditures by round 70%.
That’s promising, however buyers may be involved that shifting away from the corporate’s prenatal testing kits is a dangerous transfer that might inhibit a big income stream.
However worry not, present and potential buyers. Progenity could have a strong income stream quickly, as the corporate was simply granted an important patent by the USA Patent and Trademark Workplace.
This patent covers Progenity’s dissociated placental progress issue (PlGF) check, often called Preecludia, which is used to evaluate sufferers for preeclampsia (a probably deadly pregnancy complication).
In accordance with Progenity, the Preecludia check is anticipated to focus on an addressable market of as much as $3 billion per 12 months within the U.S.
Thus, the patent safety for Preecludia represents a serious step ahead for Progenity.
Wanting forward, Progenity Chief Scientific Officer Matthew Cooper anticipates the corporate pursuing “partnership alternatives for commercialization” of the Preecludia check.
The Backside Line
As you may see, Progenity is a small biotechnology firm that’s in a state of transition.
Whether or not that’s factor or not, I’ll allow you to resolve.
Simply know that PROG inventory is more likely to transfer far and quick, in a single route or the opposite.
In any occasion, don’t even take into consideration getting on the quick facet of the commerce. In spite of everything, the Reddit crowd may punish anybody who dares to try this.
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On the date of publication, David Moadel didn’t have (both immediately or not directly) any positions within the securities talked about on this article. The opinions expressed on this article are these of the author, topic to the InvestorPlace.com Publishing Guidelines.
David Moadel has supplied compelling content material – and crossed the occasional line – on behalf of Crush the Avenue, Market Realist, TalkMarkets, Finom Group, Benzinga, and (in fact) InvestorPlace.com. He additionally serves because the chief analyst and market researcher for Portfolio Wealth World and hosts the favored monetary YouTube channel Wanting on the Markets.
PROG shares have been buying and selling at $1.68 per share on Monday morning, up $0.33 (+24.27%). Yr-to-date, PROG has declined -68.36%, versus a 18.87% rise within the benchmark S&P 500 index throughout the identical interval.
Concerning the Creator: David Moadel
David Moadel has supplied compelling content material – and crossed the occasional line – on behalf of Crush the Avenue, Market Realist, TalkMarkets, Finom Group, Benzinga, and (in fact) InvestorPlace.com. He additionally serves because the chief analyst and market researcher for Portfolio Wealth World and hosts the favored monetary YouTube channel Wanting on the Markets. More…