Zomedica Corp (NYSEAMERICAN: ZOM) is having a rough start to the trading session this morning, following up on the declines seen in the stock over the past several sessions. While these declines have been concerning to many, I believe that we’re at a pivotal point and the fall in the price of the stock represents an interesting opportunity.
Here’s how I see it.
Why Zomedica Stock Has Been Falling
After peaking out at around $2.50 per share about a month ago, Zomedica stock started to decline. Today, it’s down to about $1 per share, and for many, that’s a concerning concept. However, in my view, it creates a compelling opportunity.
Before we get into why the stock has been falling for the past month, it’s important to get an understanding for why it reached mid-March highs. There were two key reasons for the gains earlier this year:
- Truforma. The most significant reason for the gains has to do with the company’s pet ailment diagnostics platform known as Truforma. Truforma launched in late-March, and leading up to the launch excitement ensued. The platform is a point-of-care solution, capable of detecting ailments that veterinarians previously had to ship samples off to labs for. This means that vets are now able to diagnose these ailments faster, leading to better outcomes for pets. We’ll talk about the product more later, but the excitement leading up to the launch had a lot to do with why the stock found its way up.
- Retail Frenzy. As the stock was running for the top, it got caught up in the meme stock frenzy, with investors all over social media talking about the potential for the stock to make a dramatic run for the top. This helped to exacerbate the gains being generated by the Truforma launch excitement.
So, why did the stock fall after all of this excitement. Well, there are a couple of reasons for that as well:
- The Retail Frenzy Died Down. While there’s still a bit of excitement about stocks with short squeeze potential or stocks with low floats, the retail frenzy has largely died down, and so too did the values of stocks caught up in it as investors took profits.
- Quiet Time. However, the likely bigger reason for the declines is the fact that the company has been relatively quiet. The most recent release we got from Zomedica was about the first sale of its Truforma platform, which took place about a month ago, even though the official launch was planned to take place about two weeks ago. To-date, investors have heard nothing about the commercial launch, and quiet times are concerning to investors as they are periods of uncertainty. Essentially, investors want to know what’s happening with the commercial launch, and are losing faith with every day that passes without an update.
Why This Is An Opportunity
While many shy away from declining stocks, when a stock with a feasible product and great value proposition is headed down, I view the declines as an opportunity, and Zomedica seems to fall into that category.
Sure, the quiet time has been unnerving, but the fact of the matter is that Truforma has the potential to be a blockbuster product.
The veterinary industry is a massive one, and Zomedica teamed up with one of the largest distributors in the space for the launch of its product. Moreover, Truforma has clear benefits to vets and the customers they serve.
Many ailments detected by the platform are time sensitive. If it takes too long to figure out what they are, they may become untreatable, or much more expensive to treat. As such, there’s a need in the veterinary community to be able to come up with answers quickly, and Zomedica’s platform allows for just that.
This, combined with the fact that the company teamed up with an exceptional commercialization partner, suggests that sales will be great.
What Happens Next
I have no crystal ball that tells me what the future holds, but in my view, the next big catalyst for ZOM stock will take place when the company updates investors with regard to their commercial performance.
Considering the team in charge of commercialization, and the benefits the platform brings to the veterinarians that use it, I’m expecting that commercialization is going well. Should this be the case, when an update comes down the line, significant gains will likely be the result.
The Bottom Line
The bottom line here is simple. Investors are looking for an update out of Zomedica, with 29 days since the company’s last press release. When that update comes, the potential for the stock to soar is hard to ignore. As such, if you’re not paying attention yet, now is the time to dive in.