Shares Of Organovo (NYSEMKT:ONVO) Could Be Headed For A Steep Fall
Recently we have witnessed manic trading action in 3-d printing stocks as investors throw caution and common sense to the wind and bid these stocks up into the stratosphere. This phenomenon appears particularly acute in shares of Organovo symbol ONVO.
ONVO is the classic "story" stock capturing investors imagination but having essentially no fundamentals to speak of. ONVO moved from the bulletin board to the nyse during the summer and the company is attempting to develop the technology to "print" organic tissue. It is fascinating to contemplate but what is more fascinating is that investors have seemingly forgotten that the odds that this particular company will be successful doing so and generating any commercial revenue are close to zero. Even if the company were successful it would be many years and even decades before the company turned any sort of profit. In the meantime the company would no doubt have to finance this expensive endeavor by constantly issuing stock which is essentially what they have done to date.
From a technical perspective the stock is wildly overbought having run up close to 100% in the last month alone. A pullback below 10$ would not be suspiring. The fact is at the current price investors are according a fantastic valuation to ONVO and disregarding the very real risk of massive dilution to come in the near future.
Disclosure: I am short ONVO.