Avalon GloboCare (NASDAQ:AVCO) has garnered investor attention from something rarely seen in AVCO stock: activity. After stagnating in penny-stock territory for the last few months, both trading volume and AVCO itself spiked on January 22. It fell nearly as fast in trading on the next day.
No clues as to why this occurred have become known to the public. However, with the previous lack of activity and scant information from the financial statements, investors should remain on the sidelines.
Avalon GloboCare provides biotech development and healthcare services. Through telemedicine, rehab and cell platforms they offer healthcare facility management, as well as strategic advisory and outsourcing services in healthcare. Its network encompasses over 100 hospitals and other facilities in both the U.S. and China. Peers such as HCA Healthcare (NYSE:HCA), Universal Health Services (NYSE:UHS), and Teladoc Health (NYSE:TDOC) offer similar services.
The Spike in AVCO Stock Remains a Mystery
AVCO stock launched its IPO in late 2016. As a small-cap company that spent most of its history as a penny stock, it has received little attention until recently. However, a sudden spike in activity has changed this situation. Yesterday, AVCO went up by 124%. Today, it gave up much of that gain, having fallen by about 45%.
Until mid-January, AVCO stock had seen thin trading volumes. Before mid-January, daily trading volumes rarely exceeded 10,000 shares. Some days saw fewer than 1,000 shares traded. However, trading volumes spiked to 92,300 on the trading day before the massive surge. Then yesterday, over 1.58 million shares exchanged hands. That level of activity continues as AVCO stock falls back to earth.
The reason for the sudden interest in AVCO stock remains unclear. The company filed a preliminary prospectus for a mixed-shelf offering of $50 million last week. This would allow Avalon to issue a new security and release shares at their discretion over a three-year period.
We might also receive some information from the leadership itself soon. CEO David Jin is scheduled to speak at the World Stem Cell Summit in Miami on Thursday.
Investors Have Too Little Information to Act on AVCO Stock
From what we do know, I find it difficult to recommend AVCO stock.
For now, it remains an unproven startup. Even after the recent activity, the market cap stands at just over $500 million. The stock has fallen below $1 per share at times over the last year. Before the sudden surge in activity, AVCO traded just below $3 per share range for six months.
From a financial statement perspective, Avalon appears to bring in negligible amounts of revenue. Also, it has lost between $1 to 2 million in each of the last four quarters. The balance sheet also offers little clue of activity, though additional paid in capital rose from $4 million to $23 million over the previous year.
However, with few numbers to work with, no news and an uncertain direction, I see no reason to buy AVCO stock at this time.
The Bottom Line on AVCO Stock
The recent movement in AVCO stock serves as a reminder of both the allure and the dangers of such stocks. For most of its history, Avalon GloboCare stock saw little attention or movement.
The current activity has come from seemingly nowhere. The company has not released any significant information in the last week. Financial statements also offer few clues. The CEO may reveal more at an upcoming conference. However, with little financial or news-related information, investors should stay away from AVCO stock.
As of this writing, Will Healy is long TDOC. You can follow Will on Twitter at @HealyWriting.