Stock Analysis & Ideas

Can Short Squeeze Mania Fuel BioNano Higher?

Genomics is a big deal for long-term growth investors. Indeed, this is one key sector that hyper-growth investors like Cathie Wood are increasingly focusing on.

Wood’s recently-launched Ark Genomic Revolution ETF (ARKG) has seen impressive capital flows of late. With the potential in this sector seemingly only starting to be recognized by investors, the hope among many hyper-growth investors is that the upswing in these stocks has just begun.

For genomics investors, BioNano Genomics (BNGO) is one company that’s worth checking out. While this stock isn’t yet a holding in Wood’s ARKG fund, Wood and other managers have hinted at BioNano as a potential investment down the road.

Accordingly, let’s take a look at BioNano’s business model to see if it’s a worthwhile investment today. (See BioNano stock analysis on TipRanks)

BNGO: A Genomics Business Worth Paying Attention To

BioNano provides genome analysis tools and services used in genetic research and patient testing. For those who believe genomics is the future, BioNano is on the cutting edge of providing some pretty intriguing technology to its customer base.

The company’s Saphyr system is the crown jewel most investors spend their time looking at. Saphyr has gained accolades for the results it has achieved through its optical genome mapping technology.

Saphyr has been shown to be a cost-effective genome mapping tool, providing quick results that allow actionable insights. For providers dealing with various forms of cancer, this is a very good thing. Additionally, the company’s Saphyr system has shown success in helping researchers understand why some tumors are more aggressive than others. Through further research, it is hoped that the Saphyr optical genome mapping technological breakthrough could save lives.

Now, that’s a cause to get behind.

If that wasn’t enough, BioNano’s Lineagen line of business is an intriguing one for investors looking to put their money to work in a company doing good for the world. Through Lineagen, BioNano provides diagnostic testing for patients with Autism Spectrum Disorder (ASD), and other neuro developmental disabilities.

With research spurred by Lineagen, it is hoped that the search for diagnostics and therapeutics will be accelerated via cytogenic research using BioNano’s proprietary technology.

Indeed, the company’s business model is one that investors can get behind. However, the talk of the town right now is over BioNano being a potential target for a short squeeze. Let’s take a look at that possibility further.

Can Short Squeeze Hopefuls Really Squeeze BNGO Stock?

Reading the tea leaves here, or rather the social media forums, it appears BNGO stock has become a favorite of the Reddit community. A massive spike in mentions on June 7 coincided with a sharp spike in the company’s stock price.

Indeed, linking massive retail buying to a rather unnatural spike in any stock is easier to do than ever before. A range of sites monitor how popular a given stock is at a particular point in time. It is clear that BioNano has been picking up steam as a potential short squeeze candidate for some time.

This stock opened the year at $7.20, and proceeded to go parabolic to more than $15 per share during the initial January/February meme stock mania. Since then, shares have settled down to below the company’s starting price this year. However, on June 7, shares spiked more than 20% on heavy volume, along with other meme stocks. Accordingly, it appears momentum is with BNGO stock traders right now.

Whether this momentum continues is a whole other question. How high this stock can go is really a function of how heavily retail investors keep buying this stock. Right now, there’s a lot of buying pressure underpinning BNGO stock. However, if the apes start selling, there could be some bag holders at the end of the day.

What Analysts Are Saying About BNGO Stock

According to TipRanks’ analyst rating consensus, BNGO stock comes in as a Strong Buy. Out of 3 analyst ratings, there are 3 Buys.

The average analyst BioNano Genomics price target is $12.00, and price targets range from a low of $10.00 per share to a high of $14.00.

Bottom Line

Meme stock mania is indeed in full swing. However, for the average investor who has not partaken in this action, staying on the sidelines is a much safer and more comfortable place to be right now.

Making a quick buck on this play is certainly intriguing, and traders love the volatility. But until these stocks become valued on the basis of their fundamentals, they’re going to be a hard sell for traditional long-term buy-and-hold investors.

Disclosure: Chris MacDonald held no position in any of the stocks mentioned in this article at the time of publication.

Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.

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