Zomedica (NYSEAMERICAN:ZOM) stock has been one of the more perplexing names of 2021.
Since going public in 2016, ZOM stock has spent much of its time trading below the $1 mark. It’s been literally a penny stock. This made sense because not only was the company not profitable, it was pre-revenue.
However, in 2021, Zomedica was finally able to launch its first product, Truforma, and retail traders sent the stock soaring, but the irrational exuberance didn’t last long. At the time of this writing, ZOM stock is down significantly from its high closing price of $2.70 on Feb. 8. However, at around 70 cents a share the stock is trading higher for the year.
Putting aside the $2.70 price that the stock rose to because it could, the question left for investors is fairly simple. Is ZOM stock worth closer to $1 a share? Or closer to 35 cents a share?
If the last few days of trading are an indicator, the stock may have found new life . The question is whether that will hold.
Point of Care Test for Pets
I want to emphasize that the benefit of Zomedica’s Truforma product is not simply that it’s a diagnostic tool that detects disorders in cats and dogs. The main benefit for veterinarians is that it allows a select group of conditions to be tested for at the point of care.
If you’ve ever had to have tests sent to a lab for your pet, you know that it’s inefficient at best. But it can also be a source of anxiety. When our pets are sick, we want to know what’s wrong.
However, the company is trying to build its direct sales network on the fly in order to get Truforma seeded into the veterinarian community. As the company’s latest financial results showed this is a heavy lift for the company.
And while initially, Truforma will only be able to test for select adrenal and thyroid disorders, the company has more assays being developed.
The issue is that only three assays are currently available. Even if all the assays were available, they have to be sold. Who’s going to do that? Right now it’s the company’s non-existent sales team.
Of course, I understand that how you phrase things makes a difference. Louis Navallier has a bullish outlook on ZOM stock, and part of that outlook is based on the company’s future potential. I can agree that the potential is considerable.
Hopefully, you didn’t buy into Zomedica when shares were changing hands at more than $2 a share. That’s a heavy bag to be holding. But if you have a smaller position you may be slightly ahead or slightly behind.
The question you have to wrestle with is the opportunity cost of keeping money languishing in ZOM stock.
There seem like better options. But that’s for you to decide.
ZOM Stock Is a Hard Risk To Take
One year ago, Zomedica was trading for 19 cents a share without a product in the market. Today it is knocking on a 70 cents.
Simple math tells you that’s nearly four times its price of 12 months ago, but math doesn’t account for the fact that it has a product in market. The problem is it may not be selling very many.
While the company builds out its sales force, it may be a few quarters before investors start to understand exactly what the opportunity really is.
This means that buying shares of ZOM stock is like throwing a dart blindfolded. You may hit the bullseye; you may not. I think there are stocks that have a better opportunity cost. However, if you’re a true believer a small position may pay off.
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On the date of publication, Chris Markoch 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.
Chris Markoch is a freelance financial copywriter who has been covering the market for seven years. He has been writing for InvestorPlace since 2019.