Why Nano-X Imaging’s Stock Dipped Almost 15% in September

What happened

Actions of Nano-X Imaging (NASDAQ: NNOX) fell 14.7% in September, according to data provided by S&P Global Market Intelligence. But that’s not the whole story. The share price had more than doubled at the start of the month, with the company catching investor interest with its potentially breakthrough product.

However, Nano-X stocks have also attracted unwanted attention from short sellers. Two of them alleged the company was a scam, which scared off investors. The stock collapsed as quickly as it had taken off.

NNOX given by YCharts

So what

Nano-X says it will offer healthcare providers a new way to perform medical imaging that it promotes as an improvement over traditional X-ray technology. The company’s stated goal is to make the benefits of medical imaging more accessible by increasing affordability. It’s a grand vision, but the company has yet to generate a dime in revenue.

The device that will theoretically perform this enhanced medical imaging is the Nanox.ARC, and the company hopes to bring them to market in the first half of 2021. Its near-term goal is to deploy 1,000 systems in the second half of next year. ; in the longer term, it aims to reach 15,000 by 2024. The only problem at the moment is that it is awaiting regulatory approval.

On September 15, well-known research firm Citron Research called Nano-X a “complete farce.” Another company, Muddy Waters Research, later agreed, alleging the company had tampered with photos and videos, among other things. These companies claim that Nano-X doesn’t actually have a product, which led Citron to claim that the stock was down 100% to $ 0 per share.

These are among the strongest statements these research companies have ever made to criticize a company, and they sparked the rapid sale of Nano-X Imaging shares.

Frustrated man puts his hands to his face with a stock market chart in the background.

Image source: Getty Images.

Now what

The management of Nano-X does not take these short reports while lying down. On Thursday, he announced that he would perform a live demonstration of his product and technology. The event will take place during the annual meeting of the Radiological Society of North America (RSNA 2020), which will be held in Chicago from November 29 to December 5. The stock absolutely climbed on the news.

As a method to end the arguments of these short sellers, a live demo of Nanox.ARC at RSNA 2020 would seem like a solid decision. However, even if Nano-X’s device lives up to its hype, the stock remains a risk. small cap bet for investors. The business has no income and needs regulatory approval for its product to become a viable business. In other words, investors should remember that it is important to prove the legitimacy of your product. But it’s not the same as deploying it in the real world.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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