At first glance, California-headquartered life-sciences company Bionano Genomics (NASDAQ:BNGO) might seem like a good business to invest in. After all, BNGO stock is cheap and that is what traders should look for, right?
The important lesson here is to avoid confusing “cheap” with “good.” As the old Benjamin Graham/Warren Buffett saying goes, price is what you pay, but value is what you actually get.
And, it is awfully difficult to find real value in BNGO stock when it continues to lose value month after month. Time and again, bottom fishers have lost money trying to wager on a turnaround with Bionano Genomics.
There is also an equally important lesson to be learned today. As we will see, press releases can reveal certain data points while avoiding others, thereby painting a misleadingly optimistic fiscal picture.
BNGO Stock at a Glance
In a moment, we will cover the details of a seemingly positive press release from Bionano Genomics. This release was issued on Jan. 12.
If the purpose of the press release was to drum up investor support for Bionano Genomics, it didn’t work. Despite the company’s best efforts, Wall Street still overwhelmingly voted “no” on BNGO stock.
Consider this: the stock closed at $2.78 on Jan. 12 and declined to close at $2.06 by Feb. 3. That is a decline of 25.9% in just a few weeks.
Actually, this is part of a much larger share-price decline. In February of 2021, BNGO stock shot up to $15.69 after trading at just 50 cents in November of the previous year. Bear in mind, that was a time when Reddit users were pumping up all kinds of cheap stocks with little regard for the companies’ financials or fundamentals.
As that trade unwound, some ill-timed investors lost their shirts. At this point, barring another Reddit pump, there is really nothing preventing BNGO stock from going back under $1.
Wall Street Wasn’t Fooled
While Bionano Genomics has more than one product, the best-known one by far is a genome imaging product called the Saphyr System. Except for the aforementioned Reddit run, Wall Street has largely responded to the Saphyr System with a big yawn.
At one point, the sentiment against Bionano was so negative — and the share price declined so much — that the company actually received what amounted to a de-listing threat from the Nasdaq exchange.
It is a bad sign when that happens, of course, but troubled companies can still try to entice investors with hype-filled press releases.
A case in point would be the release issued by Bionano Genomics on Jan. 12. In it, the company presented its financial results for the fourth quarter of 2021 and full-year 2021 — but the data is preliminary and unaudited.
Digging for the Relevant Data
So, the presented data is not finalized and is, therefore, subject to change. Still, let’s give Bionano’s data the benefit of the doubt, just for argument’s sake.
Apparently, the company expects to have generated between $5.8 million and $6.2 million in revenue during 2021’s fourth quarter. On a surface level, those figures might seem pretty good. Yet, those are just the expected top-line results. What about the bottom-line results — i.e., the profit or loss?
Those results, expected or actual, are not mentioned in the press release at all. That is quite telling, wouldn’t you agree?
To find the most relevant confirmed data, we will check Bionano’s Form 10-Q. As it turns out, the company incurred a net earnings loss of $29.3 million during the nine months ended Sep. 30, 2020.
Worse yet, Bionano’s loss ballooned to $49.4 million in the nine months ended Sep. 30, 2021. Moreover, the company admitted that it “expects to continue to incur net losses for the foreseeable future.”
The Takeaway on BNGO Stock
It is really a shame when we have to dig through government forms to get the full fiscal picture of a company. Bionano Genomics presented nice-looking data in its Jan. 12 press release. Still, Wall Street was not fooled into thinking that the company is doing well financially.
You do not have to be fooled, either. Until there is a reason to feel otherwise, it is best to treat BNGO stock as a sinking ship and to avoid it altogether.
Bionano currently gets a grade of “F” in my Portfolio Grader.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
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