Zomedica Corp (NYSEAMERICAN: ZOM) is having a rough start to the trading session this morning, and for good reason. What seemed to be a recent celebrity endorsement proved to be nothing but a video that was a $299 promotion.
Nonetheless, even though the video was a promotion, I still see a lot of opportunity in ZOM stock. Here’s what’s going on:
Skip to What You Want to Read
- Netflix Star Records Zomedica Video for $299
- The Dip May Prove to Be an Opportunity
- What Analysts Think About ZOM Stock
- Risks to Consider Before Buying ZOM Stock
- Final Thoughts
Netflix Star Records Zomedica Video for $299
In a recent video posted on YouTube, Netflix star, Carole Baskin from the documentary, Tiger King made a few comments about Zomedica. In the video, Baskin said:
“I don’t know if you guys have heard about Zomedica, but they help our veterinarians and our furry friends.”
She went on to say that she was, “ definitely invested in finding out more.”
Since the launch of the video, the stock has been on a tear, gaining well over 200%. However, a Yahoo! Finance contributors dug in to find that the video from Baskin wasn’t an endorsement. Instead, it was a video requested by some on Cameo for which Baskin received a small, $299 payment.
Yahoo! Finance reached out to Baskin to confirm the fact that she was paid for the video. She went on to explain that she doesn’t own any ZOM stock and does not take part in stock recommendations.
With the news that the video wasn’t an endorsement, but an advertisement, investors seem to be selling off their shares, leading to double-digit declines in the premarket hours this morning.
Sure, this may be upsetting news, but in my view, it’s creating quite the opportunity.
The Dip May Prove to Be an Opportunity
In my view, the dip that we’re seeing in the stock today will likely prove to be an opportunity. Sure, the video from Carol Baskin was an advertisement, but that doesn’t mean that Zomedica has nothing going for it.
Let’s not forget, in just a couple of months, the company plans on launching TRUFORMA, a veterinary diagnostics platform. The platform is designed for use in the point of care setting, providing nearly immediate answers to questions that previously took days to answer.
With the TRUFORMA platform providing nearly immediate results, the company may soon become a cornerstone in the pet diagnostics industry. That’s a massive, multi-billion dollar industry.
Now, I’m not saying that ZOM is going to fly today, or even tomorrow. There’s going to be some profit taking on the news. However, when the profit taking is done, in my view, the stock represents a strong opportunity.
What Analysts Think About ZOM Stock
According to TipRanks, there’s currently only one analyst covering Zomedica stock. However, that analyst has a relatively positive opinion.
The analyst covering the stock rates it a Buy with a price target of $0.30. While that price target does suggest that declines are ahead, it’s important to keep in mind that the target was provided prior to the company announcing the coming launch of its TRUFORMA platform. Therefore, upon re-review, I’m expecting for the target to be revised upward.
Risks to Consider Before Buying ZOM Stock
If you’re going to invest in anything, you’re going to have to be willing to accept risk. That’s the case with any stock, including Zomedica. When it comes to ZOM stock, the most significant risks to consider include:
- Pennies. ZOM is a penny stock. That means that the stock is susceptible to high levels of volatility and, in most cases, the business model hasn’t yet been proven, increasing the risk associated with investing.
- Product Launch. Zomedica will launch its TRUFORMA diagnostics platform relatively soon. Should the product flop in the market, significant losses could be the result.
- Capital Risk. Finally, Zomedica operates at a loss. Should the company fail to reach profitability before money in the bank dries up, it may sell newly-issued shares to raise funds. This would ultimately lead to dilution and significant declines.
There’s no doubt that an investment in ZOM stock will come with risk. Any investment does. However, if you can stomach the risk, the long-term opportunity here may be hard to ignore.
Ultimately, Zomedica will be hitting the market relatively soon with a pet diagnostics platform unlike anything else on the market today. Not only is the platform more accurate than current options, it provides results quickly and addresses several unmet needs in the veterinary space. All in all, that’s the opportunity. It’s not Carol Baskin’s opinion, it’s not the spark of interest on message boards, it’s TRUFORMA which could be the goose that lays the golden eggs. All in all, ZOM stock is one to watch.