In the two weeks since Ocugen’s share price has lost 22% of its value. So I wonder if my colleague is still holding tight or has decided to move on from his Ocugen short bet.
I never thought it was worth $8 to begin with, but I certainly didn’t have the conviction of thought to short its shares. Ramer deserves a round of applause, to be sure.
I would love to hear my colleague’s thoughts on the subject. In his absence, I’ll consider whether OCGN stock has bottomed or does it have more ground to give up. Inquiring minds want to know.
OCGN Stock Has Bottomed
I’m the last person I thought would make an argument for Ocugen stock.
After all, in June, I said I would eat my hat if OCGN were worth the $8.35 it was trading at. I think the words “ridiculously overvalued” came to mind. In my last article about the company on Nov. 8, I said I would eat four hats if it doubled in price from $16 to $32.
Thankfully, as I write this, it’s down to around $6.40, only pennies away from penny stock status.
However, as much as I’d like to be proven right about Ocugen, I’m more interested in helping readers make money from their investments. At these prices it’s lower than it has been since early October and more than 60% off its Nov. 3 high of $17.65.
So, what’s the cause of this significant correction? According to InvestorPlace’s Louis Navellier, it was a combination of things.
On Nov. 3, the World Health Organization (WHO) announced that it had bestowed an emergency use listing (EUL) for Covaxin, the company’s Covid-19 vaccine it’s commercializing with India’s Bharat Biotech.
However, investors didn’t react very positively to the news. That failure to respond caused it to slip.
The second piece of news that might have caused some downward pressure is the five-cent loss it reported on Nov. 9, a penny worse than analyst estimates. But with only three analysts covering the stock, it is fair to say that investors made too much of the penny miss.
In the end, as Navellier points out, should the company get FDA (Food and Drug Administration) approval. It could be in line to inoculate a lot of U.S. kids aged 2-18.
Add to that its potential gene therapy treatments for eye diseases, and the risk-to-reward proposition at $6 is a heck of a lot tastier than when it was trading over $17 in early November.
$5 Here We Come
InvestorPlace contributor Chris Tyler might have put it best recently discussing the lack of any imminent Covid-catalyst for the company’s share price.
“Put simply, Ocugen is once more just a clinical-stage biotech company focused on eye disease. Not that there’s anything wrong with that — I wish the company the best,” Tyler wrote on Nov. 17.
“But realize the misplaced — or rather, blind — ambition from Redditors still playing the latest Ocugen card, like an EUA filing for children in the U.S. Though the argument has value, it is largely late-stage meme-based theatrics.”
If you’re investing in OCGN with the idea that it’s somehow going to generate vaccine numbers with U.S. children like Pfizer (NYSE:PFE) and BioNTech (NASDAQ:BNTX) — 2.84 million children ages 5 to 11 have received at least one dose since Nov. 2 — when it hasn’t even gotten anywhere near approval by the FDA, you are entirely delusional.
On Nov. 21, Comirnaty doses for children started landing in cities across Canada, another sign that Pfizer or BioNTech stocks might be a better bet if you’re genuinely trying to ride the Covid-19 vaccine wave.
Through the first nine months of 2021, Ocugen lost $43.8 million on zero revenue. Approximately 64% of the loss was research and development; much of it invested in its push to commercialize Covaxin.
Ocugen’s spending in this area is only going to get worse before it gets better. So to strike out in the U.S. would be a death blow to the company. Gene therapy treatments or not.
The Bottom Line
At this point, $8 seems like the top-end of any Ocugen stock valuation. However, the longer Ocugen goes without a Covid-19 catalyst, the lower its share price should go.
That said, I don’t think OCGN will hit penny-stock status before the end of the year. There’s still a ton of volume keeping it artificially high.
More likely, it will stay in a tight range between $7 and $8. So if you buy, I don’t think you’ll lose much, but I also don’t think you’ll make anything either.
Can you say “opportunity cost?” I knew you could.
On the date of publication, Will Ashworth 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.
Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia.