Business & Investment

Why Oxford Nanopore Shares Are Falling Rapidly

NS Oxford Nanopore (LSE: ONT) Stock prices are falling. At the IPO on September 30, the stock was valued at 425p. Then, the next day, it jumped 50% to 615p. However, in the last two weeks, stock prices have fallen to 548p. Yes, some early investors are making a profit. But what else is happening?

business model

The company has “”Developed a new generation of sensing technology using nanopores It is built into high-tech electronics to perform accurate molecular analysis. “ In plain English, it is the market leader in DNA and RNA sequencing technology. The company has developed a product that analyzes DNA by passing a DNA sample through a small hole (nanopore) and measuring its response to an electric current.

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Its main product minionIs the only portable real-time DNA / RNA sequencer on the market. There are currently dozens of applications including virus identification, Ebola monitoring, environmental tracking, antibiotic resistance monitoring, food safety monitoring, cancer analysis, agricultural development, fetal DNA analysis and more.

This technology can also be used to monitor air conditioning and check for pathogens at the airport. In addition, because it is convenient to carry, it is useful not only for doctors who visit patients at home, but also for emergency medical care in ambulances. The possibilities for the future are endless, and the potential for significant revenue generation is very real. You can understand why the stock price soared first.

Finance

Prior to the IPO, Oxford Nanopore revenues increased from £ 52m in 2019 to £ 113.9m in 2020. This is primarily due to a government contract for a coronavirus test kit that supports the pandemic effort. But even though the company has almost doubled its revenue, it hasn’t made a profit yet. However, as a growth stock, it is not uncommon to invest income in R & D. Also, some investors seem ready to wait for the company to make a profit, as profits may increase in the future.

But with this Current inflationary environment, Interest rates are about to rise. So for now, I think deficit growth stocks are particularly vulnerable. Analysts do not expect the company to achieve profitability until 2026. Still, there is no guarantee. According to the latest figures, Oxford Nanopore generated £ 59m in revenue and lost £ 44.4m in the first half of this year.

On the plus side, CEO Gordon Sanghera manages special shares to deny unwanted acquisitions over the next three years. This means that biotechnology companies will not be subject to hostile takeovers during their expansion phase. This is attractive to me as a long-term investor.

My Verdict on Oxford Nanopore Stock Price

Oxford Nanopore’s share price remains 30% higher than the IPO two weeks ago. But I think part of this rise is due to investors being overly excited about the rare UK biotechnology listing. And I believe the technology could soon be replicated elsewhere. I ignore the stock price of Oxford Nanopore because the profit seems to be a few years away. It may be revolutionary, but I’m worried about the company’s financial outlook due to monetary tightening.

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Charles Archer There are no positions in any of the listed shares. Motley Fool UK does not have a position in any of the listed shares. The views expressed about the companies mentioned in this article are those of the author and may differ from the official recommendations made by subscription services such as Share Advisor, Hidden Winners, and Pro. Here at The Motley Fool, by exploring different insights, Better investors than us.



Why Oxford Nanopore Shares Are Falling Rapidly

https://www.fool.co.uk/investing/2021/10/12/why-the-oxford-nanopore-share-price-is-falling-fast/ Why Oxford Nanopore Shares Are Falling Rapidly

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