There is always a run up in the share price during the development stage of a new product or drug. Investors get overly enthusiastic during this stage and the greatest enthusiasm come as the company announces that it's new product/ drug is ready for market. Usually it's at this point that the share price spikes up making a high. Then reality begins to set in. Investors begin to realize for the company to be profitable it has to actually sell this new product/drug. It takes more time than most realize to set up sales and marketing. Investors don't understand and the share price slowly falls often going back to levels last seen during the early development stage. This is actually where the best risk to reward ratio is for investors.
My point, when I wrote the post below, was not to imply the ONVO would run up to the same price level as ILMN. Rather I wanted to show that time period shortly after the introduction of Ilumina's first product and how the price of their stock sank from $7 to 83 cents. That is the period of price decline I've been talking about that is so common among biotech stocks. You've got the product now you have to bring it to market. The average investor thinks that once the product has been created and finished the job is done, but it's not. That is why the share price often falls apart at this point. It's not because there's is anything wrong with the company or the product. The problem is that investors had an unrealistic expectation of what the share price should do after completion of the product. When their collective expectation is not realized they begin to sell their shares thinking there must be something wrong with the company. This is where we are at with ONVO.
"Illumina Inc. began public trading in July of 2000 with an opening price of $14.94. By Sept 2000 it hit a high at $25.81. There was tremendous initial enthusiasm but that began to decline and so did the price, falling to $2.84 by April 2001. Enthusiasm began to rise again as the company approached the launch of its first product and the shares hit a high of $7.08. Shortly after their first product hit the market investor enthusiasm faded again as the realities of marketing the new product set in. What investors thought would be a rocket ride to riches turned into just the opposite as the stock fell from $7 in 2001 to a low of $0.86 by March of 2003. That was to be the low. After moving more or less sideways for a couple of months the stock began a rise that took it back to $5.68 by Feb 2005. By the end of 2006 it was trading at $22.94 and by mid 2008 $46.62. There was a 2 for 1 split in Sept of 2008. By 2011 it was trading at $76.68.........
When the company doesn't yet have a marketable product/drug dilution can be a killer. It's far less a problem when it already has a marketable product. Any company has to raise cash. It's better to do it with a stock offering than taking on debt. It what they do with the cash they raise that counts. It this case funds are being spent to ramp-up production and sales and complete secondary products already in the pipeline. All is normal and all is money well spent and yes I think it will payoff big time or I would be here.
The best advice I can give is, don’t take today’s earnings news very seriously either way. It’s way too early in the new product life cycle to begin making judgements about success or failure. We have a nice pop higher today. There is bound to be backing, filling and some sort of retest of recent lows. There could even be a new low. Usually these declines end with some type of inverse head and shoulder or with a double or triple bottom patterns. Rarely are they a “V” pattern. (just watch, this time it will be a “V”). We do have a potential inverse head & shoulder in the making on the daily chart.
Most of all if you are unfortunate enough to have bought at much higher prices and now find yourself down 70%-80%, don’t let some poster frighten you into selling your shares. Basically you’ve already “crashed the car”. Now is not the time to think about fastening your seatbelt. Just sit on those shares and let things play out. You may still reap a big win in spite of yourself.
After watching this company for some time, I bought my first shares last Friday at $2.83. I will be buying more.
Motley Fool really isn't about helping the average guy make money in the market. It's about helping Motley Fool's owners profit from the markets. Motley Fool buys shares for it's own accounts at low prices. Later it hypes those shares getting it's subscribers to buy them. This is basically just a new twist on what stock brokers have done since the market began. I will bet that later you will find Motley Fool recommending ONVO when the price is much higher, at least double digits. They will hype the hell out of it driving it as high as they can, perhaps to triple digits. Then they will unload the shares they acquired on the cheap, shares they are probably buying right now.
"Perhaps it may reach three bucks by the end of 2016....maybe"
I just noticed that it $3 today. I must have slept through the holidays. Happy New Year everyone!
Those that came in early, during the development stage, take on the added risk of early failure resulting from a product or drug that does not work, falls short or can't get past the FDA. After the development proves successful it all comes down to marketing and sales. Basically an investor buying at this point is betting the marketing and sales of the new product will meet expectations down the road. It's a great time to invest because so many of the earlier investors have become disgruntled because share prices failed to continue moving up after development was completed. They begin to believe there is something fundamentally wrong with the company or it's product and sell their shares before they have completely lost what gains they had.
I don't see that much wrong with the direction they went in, especially when you consider the product only came to market 8-9 months ago. My guess is there is a lawyer in the mix someplace. This is a relatively young company and Murphy is probably overly cautious. I'm sure we have all noticed the various class action lawsuits that are being filed against companies. Doing business now days is like traveling in the old west when people had to worry about indians and bandits. Today Indians and bandits have been replaced by lawyers. My guess is he asked the company attorneys to advise him on what data it was safest to release so that it couldn't come back to bite the company & him in the form of a suite later. Attorneys tend to be overly cautious but that's their job.
I was a bit surprised today when the shares came back to take out the recent low. I thought there would at least be a week or two of sides action before the low was retested. Once the recent low at $2.78 gave way the price had no trouble falling to $2.50 which is the top end of a range of support. The price bounced off $2.50 and closed slightly above that level. This was all done on three times the average daily volume. Capitulation? Maybe but, I would expect the price to retest that $2.50 and that's when we will find out if it's just temporary support or something more. A gap down open under $2.50 that then closes over that level would be a sign that there's more to that level than just another number on a chart. I bought some at $2.83 last Friday and I bought a small amount today when the price slipped under $2.50 but, some place around $2.20 is where I hope to make the bulk of my purchases. If the price were fall under the $2.00 level and remain under it for more than just a quick spike down, I will probably abandon 2/3rds of my position until it either regains $2 in a convincing manner.
Again I think this is just the normal trials and tribulations of a new company bringing its first product to market.
It's certainly possible someone is working a short attack. But doing so is risky when a company has its product complete and is marketing it. The chance of unexpected positive news is far greater. When a company is still in primary R&D and is really nothing more than a grand hope and wild dreams a short attack is relatively risk free.
That is exactly correct. This is always a difficult ride to take for investors that were there from the start. About all I can say is try to have the same faith in the company now as you did before they had a product. Odds are you will be rewarded.
I'm posting this as an example of how the price acts during the early stage of development and marketing of a new bio tech company. I hope this might save someone from letting fear get between them and the possibility of making some real money.
Illumina Inc. began public trading in July of 2000 with an opening price of $14.94. By Sept 2000 it hit a high at $25.81. There was tremendous initial enthusiasm but that began to decline and so did the price, falling to $2.84 by April 2001. Enthusiasm began to rise again as the company approached the launch of its first product and the shares hit a high of $7.08. Shortly after their first product hit the market investor enthusiasm faded again as the realities of marketing the new product set in. What investors thought would be a rocket ride to riches turned into just the opposite as the stock fell from $7 in 2001 to a low of $0.86 by March of 2003. That was to be the low. After moving more or less sideways for a couple of months the stock began a rise that took it back to $5.68 by Feb 2005. By the end of 2006 it was trading at $22.94 and by mid 2008 $46.62. There was a 2 for 1 split in Sept of 2008. By 2011 it was trading at $76.68 which of course would equal $153.36 a share before the split. As they say the rest is history.
No one can guarantee this company will have the same success. It however you are willing to take a shot a becoming rich it is at this point in the life cycle of ONVO where you are likely to have the greatest chance of success. If you were an early investor that came in at much higher prices, the only sensible thing for you to do at this point is to hold for the eventual outcome, whatever it is or possibly at to your position if you can muster the funds and courage to do so.
Several of the insiders of ONVO have automatic sell agreements and this accounts for the regular sale of shares. This is very common and not an indication that something is wrong with the company itself.
An insider automatic stock sale is a plan (often called a 10b-5 plan) that provides that an insider will trade shares automatically in amounts and on dates set forth in the plan. It could be "sell 1,000 shares every Friday" or it could be very complicated (e.g. "sell 1,000 shares if the price hits $10 and the trading volume is at least 100,000 shares"). The reason for it is because insiders often can't sell because they have insider information. Trading with inside information is illegal. But by having an automatic plan, the insider is not trading on inside information (the trade is automatic and will happen regardless of any inside knowledge).
Also you will notice that on Sept 11th, 2014 Barry D. Michaels disposed of 300,646 shares of OMVO in the NON OPEN MARKET. The total value of the sale was $0.00. This shows up as an insider sale but what is really happening is he is moving shares out of his name and probably into a trust or some similar vehicle.
We tested the $2.50 support again today and so far it has held. It is the top of a larger band of support running down to $1.90ish. Very short term resistance stands at $2.69 and we close just above that at $2.73. Let's see if we can close above this level (2.69) tomorrow.
Stright01shot, I have never owned ONVO before last Friday. Don't know how I can prove that to you unless we meet and I show you my account records.
I've been trading since I was in my 20s. I'm now 63 and I've seen this same pattern play out with biotech companies more times than I can count. The company finally gets its product finished. The price has rocketed up in anticipation of what is sure to be a great success. Then as the process of sales and marketing get underway investors become disgruntled when they fail to see profits roll in immediately and they begin to sell. The declining price causes more selling and things begin to "snowball". Eventually it gets overdone and presents the average investor with the best risk/reward ration he is likely to see.
But you don't need to take my word for this. Just select a number of biotech companies that have been successfully marketing their products for 5-10 years. Look up the completion and launch dates of their first product. Then on a long term chart compare the price action of their shares before completion & launch and with that coming after. Much of the time you will find that the price begins to decline not long after either initial completion or first launch. Sometimes the decline is only 25%-30% while other times it's much larger. It depends on the nature of the product/drug and the cost associated with bringing it to market. If you understand this process and how it relates to share price you can make lots of money trading just biotech. If you don't understand that you will likely suffer some pain and angst.
Perhaps I'm wrong but, to me you sound like someone who bought near the high and either sold low or is still holding. If that's the case then you must either find the courage to continue to hold or, if you sold, find the courage to rebuy at some point. Opportunities will present themselves. I tend to layer my purchases in as price falls to areas of long term support.
Yes there are loads of failures in this business but, I think you are missing my point. I'm not saying buying ONVO will make you rich. It could but we will only know that in hindsight. What I'm saying is the decline ONVO has been experiencing is not necessarily an indication of failure. Declines like this are something that almost always occurs shortly after the launch of a new bio tech companies first product. This same sort of decline occurred in Illumina and took it down to 83 cents. Such declines are caused more by investor psychology than anything else. Unfortunately it's during this phase that many of the initial investors are frightened out of their shares. Imagine how many Illumina bailed out as the price fell under $1. All they were left with was a lose and a "big one that got away" story to tell their kids. When you buy something and ride it down to where it's only worth 10% of what you paid for it that is not the time to give up and sell.
George, you don't have to care. But I'm a very good trader and just trying to help some of the "shell shocked" investors I see here. Of course you will only know this in hindsight. By the way, why should anyone listen to your opinion.
The price of the shares would need to trade below $1 for 30 consecutive days.
When a security is found to be not in compliance the exchange issues the company a notification of non-compliance, but the stock is not immediately taken off the stock exchange. This letter gives the company the opportunity to respond with a description of the actions they are taking, or plan to take, to become compliant with continued listing standards. If the company doesn't respond with their plan of action within 10 business days of the receipt of the letter, the exchange would proceed with the delisting. If the exchange accepts the plan, the company's financial progress will be monitored by the exchange according to the milestones outlined in the plan.
A revers split is can be a remedy. You never know for sure but I doubt anything like that would be necessary in this case.
It plunged below $2.50 on the 19th and 20th and has rallied back above $2.50 up to $2.80. Now it is testing $2.50 as support. The little plunge under $2.50 to close at $2.45 on the Sept 1st is a classic test. The more times it touches the $2.50 support without breaking down the stronger that support will become. Next upside resistance level is $2.73.