Ocugen Needs More Than Covaxin to Boost Its Falling Shares
In recent days, Ocugen (NASDAQ:OCGN) has been a source of windfall profits for both fast-money retail traders and the stock’s deeply entrenched bear camp. But for less fleet-footed investors, it’s likely time to move on from OCGN stock. Let me explain.
Reddit’s excessive influence on a subset of companies’ shares has been a driving force on Wall Street in 2021. The group’s modus operandi is to invest in meme stocks usually backed by considerable short interest. Their picks are often a tantalizing “what one day will be” pitch, with modest street coverage and generally lesser fundamentals.
Of course, that’s not new information for anyone with even a passing interest in the stock market. Yet the persistence of this scheming beyond celebrated and reviled plays led by GameStop (NYSE:GME) or AMC Entertainment (NYSE:AMC) has been nothing short of impressive.
This past month, shares of OCGN reinforced that record. But is “once a meme stock, always a meme stock” the truth in this case? Hardly.
Ocugen Has Lost Its Meme Stock Boost
Sundial Growers (NASDAQ:SNDL). AgEagle Aerial Systems (NYSEARCA:UAVS). Clovis Oncology (NASDAQ:CLVS). They’re but a few members of a much larger group of meme stock campaigns wagered against bears.
They also serve as a warning that when a company’s narrative wears thin, and the mentions, hashtags and cute gifs stop trending on social media, the stock price begins to shrink.
More and more, OCGN stock is shaping up to be part of this ignominious group.
Ocugen partnered with India’s Bharat Biotech to distribute its Covid vaccine, Covaxin, in a timely manner in North America. However, the process has been far from easy. The application for Covaxin’s Emergency Use Authorization (EUA) from the Food & Drug Administration (FDA) was formally denied this summer.
With the non-streamlined, full drug approval process the only option available for Ocugen, no amount of positive reports — such as Covaxin receiving World Health Organization (WHO) approval overseas, or its EUA application for children in India — can change the outcome for OCGN stock.
Put simply, Ocugen is once more just a clinical-stage biotech company focused on eye disease. Not that there’s anything wrong with that — I wish the company the best.
But realize the misplaced — or rather, blind — ambition from Redditors still playing the latest Ocugen card, like an EUA filing for children in the U.S. Though the argument has value, it is largely late-stage, meme-based theatrics.
OCGN Stock Weekly Price Chart
Source: Charts by TradingView
Technically, and as the well-doctored weekly chart of OCGN stock reveals, late October’s and early November’s ape raid on the back of inconsequential Covaxin news took my recent forecast of lower share prices by surprise.
But don’t expect those fast money operations to be part of OCGN for much longer. That is, if they’re not already entirely in the rearview mirror considering its 28% short interest.
Today, without Covaxin’s plausible shot in the arm, it’s all about Ocugen’s drug pipeline beyond Covid-19. And as the bearish posturing can attest, it’s not much at this point in time.
Bottom-line, OCGN stock has seen a roughly fifty-fold valuation increase to a $1.65 billion market cap on the back of its now doomed-looking distribution partnership.
It may not be back to square one for Ocugen shareholders. But a nearby failure of trend line and Fibonacci support could prove terminal enough for bullish investors at current OCGN stock prices.
On the date of publication, Chris Tyler does not hold (either directly or indirectly) any positions in securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.
