Sign InMeme stock TTOO experiences surge in ownership, but faces financial challenges
Summary
As of the analysis on August 10, 2023, T2 Biosystems, Inc. (TTOO) has experienced increased retail interest and ownership, likely due to its classification as a meme stock, but its financial challenges, including negative EPS and a low market capitalization, suggest potential issues in the future, leading the analyst to recommend holding the stock with caution due to short-term volatility and underlying fundamental risks.
Fundamental Analysis
T2 Biosystems, Inc., (TTOO) is a Massachusetts-based molecular diagnostics company with a specialized focus on life-threatening diseases and conditions. TTOO has recently seen considerable retail interest with a stark increase in ownership - by a factor of six over the past month. This surge is part of a broader trend associated with "meme stocks," which often experience volatile shifts in valuation due to social media-fueled trading frenzies.
TTOO satisfies NASDAQ's minimum market value of listed securities policy, which means it is no longer at risk of being delisted. This seems to have been positively taken by the market and might have contributed to a recent uptick in the stock's interest and trading volumes, which have been well above the company's average. However, this situation also implies that the company's market value was previously in a precarious position, necessitating attention to its fundamental health.
The company reported a negative EPS of $8.18, indicating that it is not currently profitable. Coupled with a PE ratio of -0.04, it's clear that TTOO is experiencing some financial challenges. With a low market capitalization of $8.14 million and 24.89 million shares outstanding, the company falls into the category of micro-cap stocks – inherently riskier investments due to potential liquidity issues and market manipulation.
Technical Analysis
The stock closed at $0.32 on August 10, 2023, which represents a 4.5% decrease from the previous trading day. Still, it's been rallying recently given the 50 Day Moving Average of $0.12, showing a significant upside in the recent trading sessions. The 200 Day Moving Average stands at $0.827, suggesting a bearish trend in longer-term perspectives.
The RSI14, currently at 73, indicates the stock is trading in overbought territory, hinting at a possible pullback. The MACD is positive, suggesting bullish momentum on a shorter timeframe.
The share price also showed considerable volatility, with an intra-day fluctuation from a low of $0.31 to a high of $0.394. However, crucial resistance at $0.3425 was not crossed, hinting at a bearish pressure at these levels.
Outlook and Recommendation
T2 Biosystems's financials and market trends suggest that the company might face financial issues in the future. While it has seen a recent surge in popularity as a meme stock, this could result in price volatility that is unrelated to the company's underlying financial health or business performance.
Given the overbought RSI indicator, recent price rally, and the negative long-term trend seen in the 200 Day Moving Average, there might be a potential pullback in the short term. The meme stock movement, while likely to cause short-term volatility, traditionally doesn't offer a long-term growth assurance in stock value.
Thus, considering all the risk factors and fundamental issues, the analyst recommends holding TTOO for the next trading day and the upcoming week.
Remember, while the stock may offer short-term trading opportunities due to its meme status, it is fraught with risks in the context of its underlying fundamentals. Investors should be prepared for high volatility and take risk management precautions when investing in stocks like TTOO.
