The red-hot shares of Zomedica (NYSEMKT:ZOM) could be cooling down, as the price is off as much as 20% in premarket trading at 8 a.m. Eastern. ZOM stock had gained 146% so far this month.

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Why the drop? It could be profit taking after the shares — which have been as low as 6 cents a piece in the last 12 months — began to rise in late November. Opening the year at 23 cents a share, they closed yesterday at $2.70.

Just as likely, though, could be the veterinary health company’s news this morning that the underwriter of its previously announced common stock offering committed to purchase 91.32 million shares at $1.90 per share, a 29.6% discount from yesterday’s closing price.

For those unfamiliar, Zomedica wants to revolutionize pet care. In order to do that, it wants to make sure veterinarians have the tools they need to accurately diagnose and treat pets. Right now, its Truforma, a point-of-care platform, promises to do just that.

ZOM Stock Shows Trading Bias

InvestorPlace analyst Matt McCall last week warned that as traders have fun with ZOM stock, long-term investors should beware. “There’s no way to look at ZOM stock and argue that its rally has been driven by long-term, buy-and-hold investors,” he wrote. “It’s patently obvious that traders are behind the move.”

Readers will recall that just the day before McCall’s missive, ZOM stock rallied more than 20% as the impact of the company’s recently announced partnership with Miller Veterinary Supply to distribute Truforma sunk in. As a reminder, Zomedica plans to launch sales on March 30, meaning that a huge catalyst for ZOM stock is just a few weeks away. Through the deal with Miller, Truforma will end up in the hands of more vets, as the partner has a presence from Texas to Maine.

While highlighting the trading bias in the shares, McCall acknowledged that the Truforma commercialization could give long-term investors a reason for some optimism. However, fundamental shortcomings — including an addressable market size that “hardly seems big enough to support its valuation” — should be a cause for concern among buy-and-hold investors, he noted.

On the date of publication, Robert Lakin did not have (either directly or indirectly) any positions in the securities mentioned in this article. 

InvestorPlace contributor Robert Lakin is a veteran financial writer and editor, following fintech, agtech and property tech startups.