Is Zomedica Corp (ZOM) A Hold Or Sell After The Recent Correction?
2:19 pm Friday, May 14th, 2021
This year, the most remarkable trend to have emerged in the stock market has been that of ‘Reddit stock’. Investors from the Reddit community WallStreetBets have been responsible to pump up prices of penny stocks through short squeezes.
Many of those rallies have not sustained but enormous gains have been made by many investors. One of the stocks to have enjoyed such a rally is Zomedica Corp (NYSEAMERICAN:ZOM). The efforts from Reddit investors fuelled a massive rally in the stock and it went from 7 cents a share to $3 a share. While it is true that the company has launched its diagnostic platform for dogs and cats, Truforma, the rally in the stock seems unsustainable.
Naturally, the stock has corrected from its peak levels and is down by 70%. However, at the same time, it should be noted that the stock is up by a staggering 1100% from last October. However, when one looks a bit closer into the fundamentals of the Zomedica stock, it becomes quite clear that the stock is currently overvalued. While it is true that like many other Reddit stocks, investors can try and make a bull case for Zomedica, it should be noted that almost all these stocks have corrected sharply.
A short squeeze means propping up the price of a stock so that the short sellers are forced to buy at an unrealistic price in order to cover their positions. That can often lead to significant gains quite quickly but it is unsustainable for long. It can be said that the Truforma platform does have promise and in the long run, it may prove to be a major asset for the company. That being said, the current rally has already taken the stock to a height at which it might not be prudent for investors to consider Zomedica. It remains to be seen if the stock corrects further in the coming weeks.
