Never Ask A Scarecrow Which Direction to Trade (ONVO)

Like Dorothy talking to the scarecrow in The Wizard of Oz, traders must be confused on what direction to take when it comes to shares of Organovo Holdings (OTC: ONVO). According to the author of an article appearing in Seeking Alpha today, the company could go the way of Apple (NASDAQ: AAPL) circa 1997 when it flew from the ashes of near-bankruptcy, or Organovo could possibly follow the path of Webvan, a company that started with promise and ended in failure.

Considering the recent history in the stock, who could blame traders for pulling a little straw out of their heads? From the time shares commenced trading in late February, the stock had increased over 700% in price when it reached $10.90 per share in mid-June. As the calendar rolled over to July, the stock plunged to $2 and eventually it hit an annual low of $1.24 later in the month. On June 27, 2012, the price of the stock fell over five dollars from $9.10 to $3.77.

The free fall in shares prices coincided with the termination of the lock-up period for privately placed shares plus exercised options at $0.08 per share and other equity grants. A lock-up is the period of time that investors who acquired their shares through a private placement must hold their shares before selling them on the open market. One estimate put the number of shares potentially for sale in June at 32 million.

Traders spent this morning much like they have every other day over the last two months by trading Organovo shares in a range around $2.00. The stock opened unchanged from Friday’s closing price at $2.05. For most of the trading day, buyers and seller played a game of tug-of-war. The stock managed to reach an intraday high of $2.14 in the afternoon, but could not hold the gains. At the closing bell, share prices slipped to end the day with a loss of almost 2%. The final tally on the day showed a loss of four cents and the stock closed at $2.01. Over 434,000 shares exchanged hands during the session compared to an average daily volume of 206,000. Traders may be wondering what will get the stock out of its current funk.

In other recent news, the company was featured in an article published by the Wall Street Journal on September 19, 2012.

Organovo Holdings released financial results on August 21 for the quarter ending March 30, 2012. The company showed revenues of $120,000 and a $1.3 million operating loss.

On August 20, 2012, Zacks Small Cap Research initiated coverage on the company with an “outperform” rating.

Organovo Holdings focuses on developing and commercializing three-dimensional human tissue printing technology that can be used in drug discovery or implants in the treatment of damaged tissues or organs. The company’s printing technology works across various tissue and cell types. Earlier this year, Organovo Holdings merged with its subsidiary, Organovo Acquisition Corporation. The San Diego-based company was founded in 2007.

 

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Published by Alan Masterson

Alan has over 25 years of trading experience in the U.S. equity markets. He began his career in finance working on a program trading desk specializing in over-the-counter stocks. His career progressed from that point to his current position as senior trader on an institutional trading desk. In the evenings, Alan teaches economics at a local community college. He has contributed articles to various publications over the last six years, including feature articles for an economics magazine and various financial blogs. You may contact Alan via his email (alanmasterson@wallstreetpr.com) or his Google+ page (https://plus.google.com/103338576216002376250).

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