BNGO
What in the world is going on with BNGO? It seems as if no matter the news the stock goes down. For a company that is set to record their highest earnings ever, the stock movement does not reflect that. For smaller cap stocks this common, stock pumps, hedging, shorts; all play a role in the price. Why is the stock going down? Earlier this year Wallstreet Bets pumped the stock, it is likely that investors see this as an over valued stock. In the short term they may be right, but investors are failing to understand the potential in this company.
The Underlying
The company is on track to do at least $15 million in revenue over each of the next five years, the EPS will be cut down to the break even point very soon. The company is currently holding $38 million in cash; providing a safety net for their future. With only $25 million in total liabilities, and over $60 million in assets, the company holds a strong framework for profitability. The company currently has $16 million in long term debt; which is small for a biotech industry, PLTR a major competitor holds close to $200 million in debt. BNGO currently has $2.7 million in Net receivables and $2.9 million in accounts payable. The company is in a strong position financially an is managed well by CFO Christopher Stewart.
With the company fundamentally on the path to success, why is it that stock is doing so poorly? Investors clearly believe this stock is overvalued for the current state of the company. I hope to see a bottom of $4.20, but I understand that the company could drop below it's pre-pump under $1 valuation. BNGO dominates the genome mapping industry, and will be the major supplier to governments all around the world. The company has huge upside potential, but may be overvalued in the short term. The negativity amongst investors drives fear into buyers, continuing to push the price lower. As the 25% of institutions gain more confident in the company and increase their positions (Blackrock, Vangaurd, ect...), the stock price will thrive.
I am currently holding long on BNGO, and in the mean time generating cash buy selling covered calls. I currently have stock positions @$5.97, and Short Call options @1.21 for a strike of $5, for 21-01-2022. I have now added long put options @0.22 for a strike of $4. This is to hedge against downside lost.
