Binano Genomics (NASDAQ: BNGO) catapulted itself onto the COVID-19 stage this week, which naturally saw investors flood the market. The area that BNGO is targeting is the COVID research field. However, for most investors, the scientific jargon can make the task of understanding the company, let alone investing, extremely difficult. Thus, this article will provide our readers with a digestible explanation on why BNGO is trending, and what you want to know before jumping in.
Table of contents 1. Why the hype? 2. Here is what you need to know before investing.
Why is BNGO up 100% in a month?
At a basic level, diseases, such as COVID-19, can change our DNA structure. BNGO’s Saphyr device can detect changes in the structure of our DNA. This identification prompted BNGO to form an international COVID-19 research group with 40 world-renowned scientists and institutions. The group will use Saphyr’s detection technology to compare the DNA structure of patients who show mild symptoms to those severely affected by the virus. Overall, BNGO is looking to find out why does COVID-19 significantly affects some people but not others.
However, it is not just the association with COVID-19 that is driving BNGO higher. Bionano used its Saphyr device to map the DNA structure of 85 patients with inherited genetic disorders earlier this month. The results were quite impressive, as BNGO identified every structural change in all 85 patients. The current identification of DNA changes requires labour-intensive methods. Considering, that Saphyr is an automated system we could see BNGO reduce the time it takes to identify why certain diseases temporarily change our DNA. Thus, it is the possibility for BNGO to revolutionise the structuring of chromosomes (cytogenetic) market that is fuelling share price growth.
Everything you need to know before investing in Bionano Genomics
Before I begin, I am obliged to remind our viewers that this is not financial advice but rather investment commentary from extensive research in the field
Short answer: A short-term investment has potential but still holds considerable risk (opinion, not advice).
Riding the BNGO hype?
Investors see that a company is apart of the COVID-19 fight and are instantly ready to invest. Riding the COVID-19 news can be successful, as seen with Moderna, Gilead, and Novavax. If you think everyone will rally behind BNGO next week, then the current price could be a possible window. However, BNGO is a penny stock and is currently suffering a bearish decline. Thus, the likelihood of a bearish pattern continuing is high.
Investing without knowing about BNGO
Investing in a hot stock without knowing anything about the company would be a cardinal sin. Because how would you determine the value, and thus distinguish whether the company is oversold (possible entry point) or overbought (possible exit point). However, you can determine value through mathematics. For example, is the stock trading below (undersold)/above (overbought) a certain average, or what percentage is the stock away (deviated) from the average? Thus, value investing (think of Warren Buffet) or technical investing (think of Jim Simons) could be used to determine the value of BNGO. However, value investing demands that you understand the company and expect it to grow over the long-term. BNGO is a biotech penny stock. Thus, the probability of it rising in the long-term is low, and the scientific jargon makes understanding the company difficult.
BNGO’s resistance and support levels sit around the $1 and 0.70 cents mark. Whenever you are trading short-term, you need to make sure it is not near the resistance level. Because the closer your price is to BNGO’s resistance level, the higher the probability you will lose money in the short-term. For example, investing on Friday was extremely risky. Because the price hit the resistance level at $1 and then suffered a 10% decline from that point on. Thus, knowing a bit about BNGO’s connection to COVID-19 and entering near the bigger picture support level could potentially pay off (opinion not advice). However, investors must understand that investing in BNGO via mathematics and without a solid understanding of the company still holds significant risk.
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The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.
Written by Patrick McLoughlin, Senior Manager of YIG.