Why CHEK Stock Isn't a Buy Right Now Amid Tough Outlook
By Ambrish ShahUpdated
On Jan. 4, Check-Cap stock rose by 215.2 percent, while the S&P 500 fell by 1.5 percent. The stock was up $0.99 from its previous closing price of $0.46 on a volume of 327,075,277 shares. In the last five days, the S&P 500 has fallen by 0.1 percent, while CHEK stock has gained 320.4 percent. Is CHEK stock a buy or sell at this price?
CHEK stock has surged significantly over the last few days after the company received a listing extension from Nasdaq. On December 29, 2020, Check-Cap received a letter from Nasdaq granting a 180-day extension to regain compliance. As a result, CHEK has until June 28 to meet the minimum bid price requirement of $1 per share for continued listing.
Check-Cap’s stock price history
As of 9:23 a.m. ET in pre-market trading on Jan. 5, CHEK stock was up by about 53.8 percent at $2.23. The stock has risen by 320.4 percent in the last five days and by 303.2 percent in the last three months. The stock is trading 38.8 percent below its 52-week high of $2.37 and 496.7 percent above its 52-week low of $0.243.
CHEK on Stocktwits
CHEK stock has become a major talking point on social media platforms. An investor named MartelProphet on Stocktwits can’t believe that CHEK stock rallied from $0.40 to $2.90 on the listing extension news. The investor sold 95 percent of its position for a 500 percent return on investment.
CHEK doesn’t pay dividends
Currently, CHEK doesn’t pay dividends.
CHEK’s valuation
On Jan. 4, CHEK stock rose by 215.2 percent and closed at $1.45. At that closing price, the market capitalization was $67 million. CHEK stock trades at an EV-to-EBITDA multiple of 0.23x. Since the company isn't posting a net income right now, it doesn't have a PE multiple.
$CHEK pounded the table on this one and now chasers 200% higher $SNCA same story should play out near term
— buysellshort.net (@buysellshort) January 4, 2021
CHEK’s stock forecast
According to CNN, one analyst is tracking CHEK stock. The analyst has a buy rating with a 12-month target price of $1.50.
CHEK stock isn't a buy
CHEK stock isn’t a buy because of the delisting risk from Nasdaq. As of September 2020, the company had cash and cash equivalents of $21 million and no debt. CHEK burned nearly $13 million of cash over the last 12 months. As a result, the company had nearly 19 months of cash runway from September 2020. CHEK isn't profitable right now and probably won't become profitable over the next three years.
CHEK is a penny stock. Penny stocks carry significant risks including a lack of history and information. They are very volatile, which makes it difficult to pick the best time to enter or exit a position.
