Fluidigm Corporation (NASDAQ: FLDM) just became a bull-market magnet as its COVID-19 saliva kit received FDA approval. Optimism is high in pre-market trading as some bullish investors believe this is news to send FLDM soaring. However, the bears are screaming that a pump and dump is coming at the bell. The division in sentiment causes many investors to be in a tug of war between FOMO and shorting. Today’s article will provide our readers with a breakdown on whether the COVID-19 rising star is bearish or bullish.
Table of contents 1. Breakdown of the FDA approval 2. Everything you need to know before Investing
What does Fluidigm’s COVID-19 FDA approval mean?
The FDA is continuously looking to simplify the testing process during COVID-19. Fluidigm’s tick of approval represents just that, the FDA endorsing a more simplified testing approach. FLDM’s COVID-19 test (Advanta Dx SARS-CoV-2 RT-PCR Assay) is saliva-based, which means it does not require collection via invasive nasopharyngeal swab. However, coronavirus-saliva testing is nothing new, but what is unique is Fluidigm’s production technology. Because, Fluidigm is using an ultrahigh-throughput testing capability system, that eliminates the expense and complexity of extraction.To put the throughput testing capability system’s benefit into perspective FLDM could produce 6000 tests per day per system.
Fluidigm’s ability to simply COVID-19 testing is significant. Because the current testing methods are invasive, time-consuming, and are only relatively effective in responding to COVID-19 hotspots. Hence, FLDM’s saliva test could become an effective method to neutralise COVID-19 hotspots and, thus stave off the lockdowns. Also, investors and society are in vaccine and treatment limbo-land. Thus, FLDM’s FDA approval paints an optimistic view for COVID-19 testing and bullish investors.
Here is what you need to know before investing in Fluidigm
Before I begin, I am obliged to remind our viewers that this is not advice but rather investment commentary from extensive research
COVID-19 false hope theory
It is common to hear a COVID-19 stock go to the moon overnight only to return to Earth within the next few days. The rollercoaster can be brutal for some investors. The promise of unrealistic gains reels them in, but then the sell-off from the people who pushed the bullish narrative leave some investors burnt. While the COVID-19 false hope theory is more common in penny stocks, it does not mean Fluidigm is immune. However, Fluidigm differs slightly from your typical COVID-19 stock. Because its meteoric 600% rise is over 6 months and follows a linear progression. Suggesting FLDM is a COVID-19 stock that is transforming from a speculation to a possible coronavirus play.
While the six month chart shows organic growth, Fluidigm’s short-term price action is more volatile. Today’s insurgence of the raging bulls should increase volatility. In turn, people investing in FLDM at the bell are more exposed to a potential sell-off. Overall, Fluidigm does not appear to be a loose end when looking at the general trend but could exhibit signs of the false hope theory days after massive market news.
Institutional weighting – good or bad?
Institutions own 74.9% of Fluidigm shares. Essentially, that means the analysts did their due diligence and thought FLDM was worth investing in. Significant institutional ownership is a strong bullish sign for rising COVID-19 stocks as analyst ratings often drive retail investor sentiment. However, if the FLDM hype fizzles out, we could see a majority of the FLDM institutions take their profit bags and leave. Overall, notable institutional ownership on the share registry is a positive sign for now.
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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.
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Written by Patrick McLoughlin, Senior Manager of YIG