The Reddit investment community WallStreetBets or WSB has acquired a reputation as a major market mover following the GameStop (GME) short squeeze it drove in January. A unified approach accords Reddit investors the potential to gain significantly by squeezing short sellers out of their positions on fundamentally weak stocks. However, GME’s fundamental weaknesses have caused the short squeeze to be short lived. The stock has declined 2.8% over the past month.
Regarding the healthcare sector, the Health Care Select Sector SPDR ETF’s (XLV) 19.7% returns over the past six months reflect investor optimism about the sector’s growth prospects. However, the big rally by many of the sector’s stocks over the last year has come absent investors’ increased focus on the space. Rather, some fundamentally weak stocks have rallied thanks to WSB’s actions.
Ocugen, Inc. (OCGN)
OCGN is a clinical stage biopharmaceutical company that is focused on developing gene therapies to treat blindness. The company’s partnership with Bharat Biotech to develop COVAXIN as a vaccine candidate for COVID-19, which was announced in December, made the stock a big hit in the Reddit community. Reddit group pennystocks and RobinHoodPennyStocks have been betting on OCGN to gain in double digits in 2021.
Though initially developed to be supplied in both the United States and India, the jointly developed vaccine is currently being used to vaccinate the Indian subcontinent. While COVAXIN has proved to be 78% effective in protecting against the COVID-19 virus, it has yet to be distributed in the United States. The company plans to launch its vaccine in the U.S. soon. However, given the rapid pace of the mass vaccination program in the U.S. , the demand for COVAXIN in later months may be lean. Also, the high price of the vaccine in India, might lead to a low demand for it there too.
OCGN’s collaboration revenue for the year ended December 31, 2020 stood at $42,620. Its loss from operations increased 50.3% year-over-year to $21.28 million, while net loss rose 7.8% from the same period last year to $21.82 million. OCGN lost 31 cents per share during its fiscal year 2020. However, its shares have gained 3,671.7% over the past year, and 553.6% year-to-date.
A $0.37 consensus EPS estimate for the second quarter, ending June 2021, indicates a 294.7% improvement year-over-year. However, the company missed the Street’s EPS estimates in each of the trailing four quarters. Its revenues are expected to rise substantially from the prior year quarter to $78.10 million in its fiscal second quarter.
OCGN’s POWR Ratings are consistent with this bleak outlook. It has an overall D rating, which equates to Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors with the weighting of each optimized to improve overall performance.
The stock has an F grade for Stability, and D for Momentum, Sentiment, and Quality. It is ranked #354 of 492 stocks in the F-rated Biotech industry.
In addition to the grades we’ve highlighted, one can check out OCGN Ratings for Growth and Value here.
Humanigen Inc. (HGEN)
HGEN made its stock market debut on September 18, 2020 through a public offering of eight million shares. It raised approximately $68 million in gross proceeds. The Reddit community has taken an interest in the stock due to its COVID-19 therapy drug lenzilumab. Positive results from the drug’s phase three clinical trials, announced on March 29, have attracted popular Reddit communities, such as Baystreetbets and WallStreetBets. In fact, one Reddit chat forum expects shares of HGEN to hit $120 in less than three months, according to a conversation thread posted on January 27.
HGEN has gained 348.7% over the past year to close yesterday’s trading session at $18.55. However, the stock has been losing momentum lately because COVID-19 cases the United States have been declining as a result the nation’s mass vaccination drive. Furthermore, analysts expect HGEN’s EPS to remain negative in the first two quarters of 2021.
HGEN generated $312,000 in licensing revenues in the fourth quarter, ended December 31, 2020. However, the company’s loss from operations rose 1,822% year-over-year to $32.30 million during this period. This can be attributed to a 1,841% rise in operating expenses. Its net loss was $32.30 million, up 1,494% from the prior year quarter.
A $3.77 consensus EPS estimate for its fiscal year 2022 indicates a 31.9% decline year-over-year. The Street expects the company’s revenues to decline 23.9% from the same period last year to $405.26 million.
It’s no surprise that HGEN has an overall rating of D, which equates to Sell in our proprietary rating system. The stock has an F grade for Stability, and D for Growth, Sentiment, and Momentum. It is ranked #341 in the Biotech industry.
We have also rated HGEN for Value and Quality. Get all HGEN Ratings here.
180 Life Sciences Corp. (ATNF)
Clinical stage biotech company ATNF is well-known in the Reddit community as one of the most shorted stocks and could potentially lead to a GameStop-like short squeeze. The stock was cited by Reddit group’s WallStreetBets and RobinHoodPennyStocks as the most shorted stock with immense upside potential. Of 3.48 million floating shares in the market, 3.03 million shares are short, as of April 14. ATNF went public through a reverse merger with KBL Merger Corp. on November 27, 2020. Shares of ATNF have gained 279.9% year-to-date, and 15.6% over the past five days. However, the stock declined 3.2% in the last trading session to close at $10.04.
On April 20, ATNF received a letter from the Nasdaq Stock Market regarding a breach of listing rule because the company failed to publish its annual earnings report 10-K for the year ended December 31, 2020. Though this does not affect the stock’s listing on the Nasdaq exchange, it sheds a negative light on the company’s financials.
In February, ANTF raised $11.70 million through a private placement offering of 2.56 million shares. It plans to use the proceeds to develop its rudimentary drug pipeline.
ATNF’s loss from operations for the quarter ended September 30stood at $403,397, up 78.7% year-over-year. Its net loss amounted to $1.88 million, representing an 8,548.2% rise from the same period last year. And its loss per share increased 3,500% from the prior year quarter to 36 cents per share.
ATNF has an overall D rating, which equates to Sell in the POWR Ratings system. It has a grade of D for Momentum, Quality, Stability, and Sentiment. The stock is ranked #347 in the same industry.
In total, we rate ATNF on eight different levels. Beyond what we’ve stated above, one can view ATNF’s ratings for Value and Growth here.
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OCGN shares were trading at $12.39 per share on Friday afternoon, up $0.43 (+3.60%). Year-to-date, OCGN has gained 577.05%, versus a 11.99% rise in the benchmark S&P 500 index during the same period.
About the Author: Aditi Ganguly
Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the do’s and don'ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing equities. More...
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