Investors will remember Longeveron (NASDAQ:LGVN) as a late 2021 meme stock. The biopharmaceutical company briefly shot to market prominence in late November 2021 before beginning a gradual decline. LGVN stock has spent the past few months moving steadily downward with little company-specific news. Tomorrow, however, Longeveron reports fourth-quarter 2021 earnings. Shares have been rising in anticipation.
This morning began with LGVN stock shooting up. While it was quick to dip, shares have since rebounded. As of this writing, the stock is up more than 6% for the day and seems to be pushing steadily upward. Shares rose more than 15% in premarket trading as well.
Pre-earnings report spikes should be expected. When it comes to small-cap companies like Longeveron, though, growth sustainability is an ever-present question. And in this case, the answer may be that growth is not sustainable after all.
What’s Happening with LGVN Stock?
Longeveron’s history is likely not reassuring to investors. Following it’s late 2021 spike, InvestorPlace contributor Stavros Georgiadis described the name as “another biotech stock with a roller-coaster-style price swing.” Georgiadis went on to cite the company’s “unsustainable rally trading” as reason for investors to avoid it.
These types of trends are not uncommon for small- and micro-cap stocks. They are also synonymous with the biotech sector, a home to many companies whose growth is often driven by clinical trial momentum. If a biopharma company encounters a setback in a drug or treatment trial, the news can send shares down as quickly as they rose.
Like all pharmaceutical producers, Longeveron has projects in its pipeline. But it has also been a while since investors saw any favorable coverage indicating the company might be close to a breakthrough. Longeveron’s cellular therapies mostly deal with anti-aging. While there is plenty of demand for such products, progress on moving any of them forward hasn’t been reported since early January.
What It Means
This doesn’t mean that Longeveron won’t announce an important development soon. However, until the company does, investors might be wise to proceed with caution given LGVN stock’s volatile history. A big problem with former meme stocks is that it can be hard to evaluate their potential to start rising again.
Unless the company reports something important in tomorrow’s earnings call, it’s unlikely we’ll see LGVN keep rising. The company doesn’t seem to have any catalysts to report that could push the stock up. Additionally, the online investors who helped drive meme stocks up previously are likely preoccupied with other things right now. There’s little to draw them to the biopharma sector and even less to draw them to Longeveron. The company hasn’t given Wall Street much reason to pay attention.
Investors should keep an eye on LGVN stock prior to the earnings call, but keep in mind that it’s likely about to fall back into the red.
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On the date of publication, Samuel O’Brient did not hold (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.
