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Tue, June 6 at 7:00PM ET

The Math Simply Doesn’t Favor Ocugen Stock

Some companies have trouble written all over them. One such example is biopharmaceutical firm Ocugen (NASDAQ:OCGN). Even before the novel coronavirus upturned the world, OCGN stock was a struggling unit, with the issuing company facing bankruptcy. Overall, this fundamental assessment hasn’t changed. What has shifted, though, is the surrounding ecosystem.

A scientist holding a test tube in a stock image
Source: Shutterstock

As the Wall Street Journal laid out, when the pandemic initially devastated the U.S., many employees found themselves either working from home or not working at all. Either way, for several months, both categories of the labor force were supported. Obviously, those operating remotely still had a job. For those laid off, state unemployment plus federal unemployment support kept food on the table and then some.

In this unprecedented situation, many people, particularly young professionals, turned to the investment market. At first, some of the companies that they elected made sense, such as technology firms. However, others like OCGN stock, made zero sense whatsoever outside that they were nominally cheap.

Indeed, I’ve covered many deeply embattled companies that had no business receiving any investor support, yet they did. Ultimately, I believe such stories will turn out badly. Thus, I have a dim view of OCGN stock.

Unsurprisingly, most InvestorPlace writers have come to the same conclusion. But one contributor, Lou Carlozo, gave somewhat of a contrarian view. Although Carlozo isn’t pounding the table on OCGN stock, he did point out one fact that hasn’t gone unnoticed by speculators. Ocugen founder, chairman and CEO Dr. Shankar Musunuri purchased a sizable amount of shares last December.

Clearly, Musunuri believes in his company’s prospects. And if shares return to anywhere near their highs, a small bet can go a long way. But I usually like to put my money on exciting companies that are true leaders in next-generation movements that will forever alter how our society operates for years to come.

The Probability Game Doesn’t Work for OCGN Stock

Using Carlozo’s example, let’s say an investor purchased $100 worth of Ocugen shares. Should OCGN stock return to 25% of its initial public offering price, that Bennie will turn into $50,000. My colleague goes on to state:

“If you were going to spend $100 on some gadget for your iPhone, you could just as easily buy 300 shares of OCGN, tuck the stock cert in a drawer and call it good. Chance are you won’t miss the money once it’s spent. You may even forget.

And maybe, just maybe, you’ll be cleaning out that drawer years later, find the OCGN certificate you forgot about and discover you’re thousands of dollars richer. Awesome!”

But how realistic is this prospect? Carlozo himself acknowledges that this is a moonshot. And even though his math isn’t wrong, it’s very unlikely to occur. It’s so unlikely that it’s not worth even thinking about OCGN stock.

OCGN stock week-over-week gains/losses breakdown
Click to Enlarge
Source: Chart by Matt McCall Research Team

Over the trailing five-year period, there have been 262 weeks of trading. Of that number, 55% have resulted in week-over-week losses, while only 41% yielded gains. Just under 4% of the time, Ocugen stock netted neither gains nor losses.

But that’s not the entire story. Most of the week-over-week performances (excluding 0% gains/losses) occurred within a range of plus/minus 10% (167 weeks). In this category, 100 weeks or 60% resulted in week-over-week losses. In the category of plus/minus 10% to under 30%, 54% of the 65 weeks here resulted in losses.

The only time the bulls win out in terms of probability is in the category of plus/minus 30% or more/less. In the extreme tail of the performance spectrum speculators do win out, 55% versus 45%. But the number of times the bulls win (11 out of 262 weeks) is incredibly infrequent.

You Will Lose in the End

As I said, the possibility that you can win big money with penny stocks isn’t wrong. And it’s true that a small sum like $100 may not be missed or indeed be forgotten. At the same time, I’m not sure if it makes sense to even spend that money on a venture that has such a poor chance of winning.

Wouldn’t it be better to place that money into a high quality growth stock? That way, when you clean out your drawer, you may be looking at a $100 profit. Check that — you’re almost certain to be looking at something more than $100.

Depending on the kind of growth stocks you pick, the probabilities can still favor set-it-and-forget-it strategies. But with something like OCGN stock, you really can’t do anything but hope for the best — and that you’re paying attention when that best-case scenario arrives.

Otherwise, you’re better off avoiding this troubled company. Sure, you can make money off it, like you can with a lottery ticket. But neither event is realistic.

That’s why I want to quickly bring your attention to a growth play that’s actually worth your time. It’s bound for long-term success, only the space it focuses on is mobile communication.

While several tech titans helped lay the foundation for our hyper-connected society, this company stands to lead a technological revolution that will forever change communication on a global scale.

As InvestorPlace’s chief technology analyst, I’ve worked feverishly with our veteran research team to identify the best stocks to buy. Over the years, InvestorPlace’s research has helped millions get ahead of the curve. Our subscribers have enjoyed massive gains in tech titans long before they were kings.

Now, I’m ready to share with you the stock behind the next big development in communication. The company has already inked deals with key mobile phone partners. But it’s bound to become its own king with an approach to mobile interaction that we’ve never seen before.

On the date of publication, neither Matt McCall 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.​

Matthew McCall left Wall Street to actually help investors — by getting them into the world’s biggest, most revolutionary trends BEFORE anyone else. Click here to see what Matt has up his sleeve now. As of this writing, Matt did not hold a position in any of the aforementioned securities. 

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