Sometimes the stock is surging, but other times it’s plunging. If biotech bets are your bag, then check out Progenity < NASDAQ:PROG>, as PROG stock is unsafe, unstable and undeniably exciting.
Progenity fits just about any definition of a penny stock: low share price, low market cap and volatile as it gets. Catch it at the right time, and you could quickly double your capital.
Or, PROG stock could go to zero. And as we’ll see, the stock’s price history shows a long, persistent downtrend.
At the same time, a Reddit-fueled run-up might be in store for Progenity. So, let’s start with a short – and admittedly, cringe-inducing – price history of this fast-moving biotechnology stock.
A Closer Look at PROG Stock
Going back to the beginning, Progenity had its initial public offering (IPO) on June 22, 2020. At that time, the company sold approximately 6.6 million shares at $15 apiece.
Pretty much immediately, the early investors were in the red. PROG stock dropped to $9 in July 2020, and closed out the year at $5 and change.
If anyone bought that “dip,” they probably soon regretted their decision. The Progenity share price continued its downward slide into 2021, falling below $2 during the sweltering summer.
As I’m writing this in early October, PROG stock is trading at a stunningly low $1.32. Could sub-$1 be next?
While we’re looking at the data, it should be noted that Progenity’s trailing 12-month earnings per share is -$4.28.
That’s a hard pill to swallow when the share price is below $2.
It’s true: the short interest in Progenity shares literally doubled from the end of August to mid-September.
Therefore, Reddit users might set their sights on Progenity for a short squeeze in the near future. No guarantees here, of course, but if it happens, the snap-back effect could be powerful.
All of that being said, I don’t want anyone to just buy PROG stock without knowing what the company does to make money.
To put it simply, Progenity provides non-invasive prenatal screening tests for women – or at least, that was the company’s primary revenue source (I’ll explain this in a moment).
As MacDonald clarified, “These tests allow users to see whether any deformities or abnormalities exist with their unborn children.”
MacDonald also observed that PROG stock collapsed by more than 50% in a single trading session in August. So, what happened?
First, Progenity announced a share offering which provided for an additional $40 million in financing.
That stock offering would undoubtedly bring an influx of capital to Progenity, but dilution typically isn’t viewed as a good thing for long-term investors.
Changing the Focus
The other main concern was that Progenity announced last week that it was shifting its focus from prenatal testing kits to the company’s biotech pipeline.
This move would apparently reduce Progenity’s operating expenditures by around 70%.
That’s promising, but investors might be concerned that shifting away from the company’s prenatal testing kits is a risky move that could inhibit a significant revenue stream.
But fear not, current and prospective investors. Progenity may have a robust revenue stream soon, as the company was just granted an important patent by the United States Patent and Trademark Office.
This patent covers Progenity’s dissociated placental growth factor (PlGF) test, known as Preecludia, which is used to assess patients for preeclampsia (a potentially fatal pregnancy complication).
According to Progenity, the Preecludia test is expected to target an addressable market of up to $3 billion per year in the U.S.
Thus, the patent protection for Preecludia represents a major step forward for Progenity.
Looking ahead, Progenity Chief Scientific Officer Matthew Cooper anticipates the company pursuing “partnership opportunities for commercialization” of the Preecludia test.
The Bottom Line
As you can see, Progenity is a small biotechnology company that’s in a state of transition.
Whether that’s a good thing or not, I’ll let you decide.
Just know that PROG stock is likely to move far and fast, in one direction or the other.
In any event, don’t even think about getting on the short side of the trade. After all, the Reddit crowd might punish anyone who dares to do that.
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On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.
PROG shares were trading at $1.68 per share on Monday morning, up $0.33 (+24.27%). Year-to-date, PROG has declined -68.36%, versus a 18.87% rise in the benchmark S&P 500 index during the same period.
About the Author: David Moadel
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets. More…