over 3 years ago • 2 mins
Another activist investor claimed on Tuesday that X-ray maker Nano-X Imaging looked like the next Nikola, fracturing the company’s share price – but according to investment bank Morgan Stanley, American tech stocks in general could be in for further falls 😟
Nano-X claims to have developed groundbreaking portable (and affordable) digital X-ray technology. It “went public” a month ago, selling $165 million worth of shares to US investors in an initial public offering despite lacking regulatory approval for its diagnostic devices – or anything approaching a profit.
The company’s newly-public stock subsequently tripled in price – until last week, when short-selling specialist Citron Research published a characteristically acerbic report. According to Citron, Nano-X also lacks real customers, a working prototype, or indeed any hard evidence for its disruption of a highly competitive market – earning it the moniker “Theranos 2.0”.
Then, on Tuesday, Nano-X was subjected to the penetrating gaze of Muddy Waters. The influential activist prefers to use recently criticized electric truck maker Nikola – whose founder left the firm on Monday – as a comparison, pointing to both companies’ penchant for dodgy demo videos and borrowed respectability, as well as over-cozy investors. Nano-X’s US-listed stock has now fallen over 55% in mere days 📉
Other investors have paid increasing attention to these short-sellers’ research recently – but not everyone agrees with their analyses. Citron reports from the past year have so far proved well off the mark in their predictions for Peloton and Sonos’s share prices, and Nano-X’s stock remains comfortably above Citron’s $0 “target”; it may yet come back with a robust rebuttal.
Indeed, any further declines could owe much to trends in the wider US stock market. Adding to a chorus of investor pessimism on Monday was the Morgan Stanley analyst who predicted the tech-heavy Nasdaq index’s 13% drop this month. With short-selling positions at a 12-year high, he reckons such stocks could have another 12% to fall before stabilizing.
Even if the Nasdaq does enter a “bear market”, however, it’ll likely remain above its starting level for the year – thanks in part to hedge funds’ apparent commitment to big Internet stocks. That may leave the Nasdaq’s performance in 2020 looking better than the S&P 500’s. The latter index is exposed to a broader range of industries, meaning it’s less influenced by tech selloffs – but also less influenced by their gains 🤷♂️
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