T2 Biosystems: Volatile Stock Faces Uncertainty Amid Meme Stock Surge

Fundamental Analysis

T2 Biosystems, Inc. (NASDAQ: TTOO) is a healthcare stock specializing in in vitro diagnostics. Currently, the company's stock is experiencing some turbulence as it considerably swings from occasional spikes in interest to detrimental losses. This volatility has been driven by "meme stock" enthusiasm, leading to a price surge of around 200% within the month of August alone. Such rally in price, particularly when it isn't attributed to a substantial improvement in the company's fundamental performance, can significantly increase uncertainty about the stock's stability.

The company has a market cap of approximately $8.41 million, indicating it is indeed a small-cap stock, which typically come with their particular risk-profile and volatility. On the day of last close (August 11, 2023), 70.42 million shares were traded, which is notably higher than its 65-day average trading volume of 83.19 million shares. This data suggests an increase in market interest towards the stock, probably a consequence of its recent meme stock status. However, such frenzy can be temporary and may lead to a sharp price drop when it subsides.

Analyzing T2 Biosystems' earnings per share (EPS) at -8.18 and negative price-to-earnings ratio (PE) of -0.04, it can be observed the company is unprofitable. In general, unprofitable companies can be risky investments, especially if they're not generating substantial revenue growth.

Technical Analysis

From a technical perspective, T2 Biosystems has shown a significant price increase in the near term. The stock is presently trading above its 50-day moving average (0.13) and under its 200-day moving average (0.81), denoting intermediate-term uptrend while the longer-term trend remains bearish.

T2 Biosystems' RSI (Relative Strength Index) of 75 suggests that it is in overbought territory. Generally, an RSI reading over 70 indicates overbought conditions, which could mark a potential downturn in the future. Moreover, the MACD (Moving Average Convergence Divergence) of 0.04 suggests a bullish trend, while the high Average True Range (ATR) value of 17.01 denotes a high degree of volatility.

Lastly, the company faces support at $0.33 and resistance at $0.34. This means that if the stock price falls, it might at least momentarily hold before reaching $0.33 (support level), while it might face selling pressure above $0.34.

Short-Term Prediction

Based on the current data and trends, T2 Biosystems' stock may continue its upward trajectory in the next trading day, given the meme stock hype. However, given its unprofitable status and high RSI, a potential pullback, even a sharp one, is always a possibility over the short term future.

Long-Term Outlook

Over the upcoming week, the sentiment driving the stock's price is expected to potentially calm down, thereby leading to a potential price correction. The high degree of volatility and unprofitability might drive away more conservative investors, contributing to a downward price movement.

Evaluation

In summary, taking into account T2 Biosystems' current fundamentals and technical trends, the stock is evaluated as a "Sell" for conservative investors due to intensive volatility, overbought conditions and unprofitability. However, for risk-tolerant investors who can withstand potential losses, it might be a "Hold" depending on developments in the meme-stock driven demand. Still, any new investments in the stock should be done with great caution, considering the stock's high volatility and unprofitability.