Bionano Genomics (NASDAQ:BNGO) stock has seen better days. It sits now more than 50% below it’s 2021 high. At its lowest in May it was down 70% to that mark. However, I wouldn’t yet write its eulogy because BNGO stock now has good things going for it.
The bulls are showing signs of life that warrant sticking it out a bit further. In early trading this morning, BNGO stock is showing a strong positive posture. Regardless of fundamentals, there is currently a successful trading range opportunity. Bulls and bears can profit from it.
Since the bottom, the stock established a healthy ascending price pattern. Technically there has been a critical pivot zone around $7 per share this year. This has been in contention since Jan. 5. It has played a pivotal role on several occasions in March, April, and now.
BNGO Stock and the Bulls
The bullish thesis for bingo stock is that the buyers have a reasonably solid base upon which they can build.
If price rises above $9 it could break out to above $12 dollars per share. I know that is a big “IF,” but with a stock this wild, it is necessary to plan ahead.
On April 9 I wrote an article about BNGO and I laid out two scenarios that played out to a tee. I predicted that if it lost support that it would lose another 30%. I also pointed out the strong resistance at $9. What followed was exactly this scenario. Within two days it fell into a 37% correction from support. Then it rallied back impressively and failed at $9 per share.
The win here is that we now have a clear trading range to guide investment decisions. The breakout from $9 per share will be epic so is worth chasing.
Meanwhile, we also now know the downside supports from which to reload rallies. Smart money will buy the dips into the lower end of the range and fade the rip into $9. But if the bulls finally prevail then the rally is on to $12 or higher.
Bionano Genomics Stock Is Not Cheap
Fundamentally, there’s not much to lean on from the traditional metrics. Revenue is still somewhat stagnant and meek. The losses are accelerating and the price-to-sales ratio is 180, which is outrageous.
But the story for BNGO stock is all about future potential. They have a noble mission to help research killer diseases and aid with clinical discovery of solutions.
The pandemic last year was a wake-up call that we are a fragile breed. The more companies like Bionano Genomics, the better for us. Medical breakthroughs like these require years to develop. While the Saphyr product line spurred quick interest in BNGO stock, its fruits could come much later to the company.
The Long Run and BNGO Stock
Sharp spikes like the ones last week are enticing for investors to trade the technical scenarios at hand. But the story here is to bet on the long-term home run for their success. This is the kind of thinking that Ark Invest seeks. In past decades, Warren Buffett taught us how to pick current successful businesses to buy. This is not one of them, but it doesn’t have to be. It is a bit worrying that BNGO stock is on part of an Ark ETF. It’s not a deal breaker, but it is cause for thought.
Regardless, every investment portfolio needs a few speculative bets. BNGO makes for a good one for the long term with special caveats. The main one being that this is speculative, therefore, requires a lot of hope of future prospects. One would ignore current financial metrics because they are not part of the decision. The bullish thesis is solely based on innovation becoming norm later.
Also, this is not a young company since it was born in 2003. It has had time to mature on Wall Street, yet its stock remains violent. Owners of it should expect huge fluctuations in draw-down until the bet plays out. This is part of making speculative bets on weak financial metrics.
On the date of publication, Nicolas Chahine 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.
Nicolas Chahine is the managing director of SellSpreads.com.