Zomedica (ZOM) stock moved above the $1 level after a month on June 3. However, the stock couldn't hold on to that price level and eventually closed below $1. The stock was trading higher in early markets on June 4 and flirting with the $1 price level. Meanwhile, the rally in Reddit stocks seems to be losing steam. What’s next for Zomedica stock and how high can it go amid short squeeze 2.0?
While Zomedica was once very popular on the Reddit group WallStreetBets, it isn't a top discussion in the group anymore. Reddit traders were successful in triggering a big rally in AMC stock. However, the rally has fizzled away partially because of the stock sale.
Is a short squeeze happening in ZOM stock?
ZOM stock has gained 22.9 percent over the last 10 days. This has left many investors wondering whether a short squeeze 2.0 is happening in the stock. According to data from Fintel, over 50 million shares of ZOM stock were sold short on June 3, which was 35 percent of the trading volume on that day.
Along with the short squeeze, the rally in meme stocks seems to be driving ZOM stock higher. Also, the stock was looking attractive towards the beginning of May, as I noted in a previous article.
Be patient with ZOM stock
Zomedica went overboard with stock issuance and as a result, it had cash and cash equivalents of $276.6 million as of March 31, 2021. The stock issuance was done at a higher price than what ZOM currently trades at.
From a financing perspective, Zomedica has managed to derisk its balance sheet by raising plenty of cash. However, it has also resulted in massive dilution. As of May 10, the company had over 974 million outstanding shares.
Looking at the operational side, the company has started the commercialization of Truforma and also reported revenues of $14,125 in the first quarter of 2021. While the revenues aren't much, it signals that ZOM isn't a pre-revenue company.
If the Truforma product can gain traction in the market, better days could lie ahead for Zomedica stock. The market for pet care is growing fast, which bodes well for Zomedica. In its filing, citing data from MarketsandMarkets, Zomedica said that the market opportunity for companion animal diagnostics is expected to rise from $1.7 billion in 2019 to $2.8 billion in 2024.
Zomedica stock price prediction
Only H.C. Wainwright has provided a forecast for ZOM stock and analyst Swayampakula Ramakanth has a buy rating with a $1.2 target price on the stock. Interestingly, H.C. Wainwright participated in the bought-out stock offering for Zomedica in the first quarter of 2021. The shares were sold at $1.90, which is almost twice the current stock price.
What’s next for ZOM stock?
ZOM stock could rise more from these levels. The rise in the stock hasn’t been speculative like it was in the first quarter of 2021. The stock has been going up as the company advances to scale up its capabilities to commercialize Truforma. Overall, I expect the rally in ZOM stock to continue.
ZOM stock has crossed above its 50-day SMA (simple moving average), which is a bullish indicator. On the downside, the 200-day SMA has been strong support for the stock.