DMK Pharmaceuticals (NASDAQ:DMK) is a textbook example of how a promising company can go down the drain in a matter of years, months, or even days. I am bearish on DMK stock and hope that investors will learn a crucial lesson from the downfall of DMK Pharmaceuticals.
DMK Pharmaceuticals is a drugmaker that actually has an FDA-approved opioid overdose treatment called ZIMHI. However, just because a company has an FDA-approved drug, this doesn’t necessarily mean the company is viable for the long term. So, let’s delve into the recent, startling news that’s putting DMK Pharmaceuticals in the headlines in the worst possible way.
DMK Pharmaceuticals: A Whole Lot of “Restructuring” Going On
The word “restructuring” can mean different things in different situations. Here’s an example of what I’m referring to. In October, DMK Pharmaceuticals “restructured” its executive team. This sounds like an exciting development, right?
Don’t get your hopes up. This “restructuring” is a polite term referring to the replacement of DMK Pharmaceuticals’ president, chief financial officer, and chief operating officer. A more honest assessment would call it “executive turnover.”
If one or more of DMK Pharmaceuticals’ executives jumped ship recently, I can’t really blame them. In 2023’s third quarter, DMK Pharmaceuticals generated only about $9,000 in revenue (the company called it “$0.0 million”). Needless to say, having an FDA-approved drug doesn’t mean much if there’s essentially no revenue being generated. Also, unsurprisingly, DMK Pharmaceuticals didn’t post a quarterly profit in Q3 2023.
Finally, DMK Pharmaceuticals announced a different kind of “restructuring” today. This time, it’s a Chapter 11 filing. It’s potentially the beginning of the end for DMK Pharmaceuticals, and now we can easily figure out why DMK stock fell by 57% today.
Is DMK Stock a Buy, According to Analysts?
On TipRanks, DMK comes in as a Moderate Buy based on just one Buy rating given to it in the past three months. DMK stock’s price target is $1.50, implying 538.3% upside potential.
Conclusion: Should You Consider DMK Stock?
Even if it’s trading at pennies on the dollar, DMK Pharmaceuticals stock is just too risky to hold for any length of time. Hopefully, today’s traders can take home a lesson about why it’s important to maintain tiny position sizes in penny stocks. In any event, I am certainly not considering adding DMK Pharmaceuticals to my portfolio anytime soon.
