Invitae
During the post-pandemic trading frenzy in many momentum and growth stocks, NVTA was a big winner as prices climbed from $8 to over $60 before topping in early 2021. It was also one of the largest holdings of Cathie Wood's ARK funds and was seen as a leading company in bringing genetic testing to the public. Of course, like nearly every momentum stock, Invitae couldn't meet these lofty expectations, and shares fell all the way below $2. And just like its incredible ascent sucked in momentum and retail traders, its decline attracted short-sellers who saw easy prey.
Inside the Numbers
In Q2, Invitae reported a net loss of $10.87 per share which equated to $2.5 billion. This was due to the company taking a write-off on certain investments.
A better gauge of the company's performance is its non-GAAP loss of $0.68 per share which exceeded analysts' estimates of a $0.74 per share loss. Revenue also beat expectations at $136.6 million which was 18% higher than last year.
Clearly, the results were better than expected. It also issued better guidance than expected as it sees revenue growth between 15% and 25% past 2023.
But, the major factor in Invitae's huge gain was that nearly 30% of its float has been sold short. And, the short thesis of a business in terminal decline seems to be invalidated by this earnings report.
Some of the positives included total active healthcare provider accounts increasing by 25% and active pharmaceutical and commercial partnerships up by 52%. There's also increasing momentum in the medical community to encourage universal genetic testing which could help doctors and patients identify risks at an earlier stage where more effective and cheaper intervention is possible.
Another reason that Invitae's trend may have turned is that the company aggressively cut expenses and reduced its headcount which will give it a longer lifeline. Still, barring an unexpected jump in revenues, it's likely that Invitae will run out of cash sometime in 2024 which means that dilution is likely.
