Call me a skeptic, but if it looks, smells and quacks like a duck, it’s probably a duck. And when it comes to buying micro-cap coronavirus play iBio (NYSEAMERICAN:IBIO) investors should consider running far away from IBIO stock.
Recently, the mainstream media has been vigilant in warning Americans to be wary of scams promising coronavirus cures. These are often perpetrated by email or phone in exchange for just the smallest amount of upfront personal information. But those hustlers aren’t alone.
Wall Street can be another place for classic hustles and deceptions at the expense of the unwitting. It’s in this darker alley of the market where I suspect IBIO stock has quietly nested. That is, until a lucky break to quack loudly unveiled itself. The coronavirus has allowed iBio shares to make noise and fly higher.
For the record, I have no proof iBio, a bio-pharmaceuticals company, isn’t everything it claims to be. Just call me a cynic of micro-cap stocks sporting lesser listing requirements and colorful, intoxicating press releases that pop out of the wood work when opportunity knocks. And for good reason too. The fact is almost all of these micro-cap stocks don’t prove to be the next big investment. Worse, many simply vanish.
My advice, forget about trying to own the next Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) or a Costco (NASDAQ:COST) by starting with this caliber of stock as your pool of investments. Moreover, you can start today by running away from IBIO stock, which soared from 25 cents to nearly $3.50 a share this past month. Oh, and it also saw its puny $15 million market cap rocket upwards to more than $200 million at its highs.
To be fair, IBIO stock’s dangling coronavirus carrot could prove a quick windfall for the company, if in fact it finds a vaccine which works. But as InvestorPlace’s Luke Lango points out, COVID-19 is still a one-off event. It’s also important to be mindful of overzealous self-promotion on Wall Street. And by my count, since iBio shares were first plucked out of obscurity last month, the bulk of reporting has been press releases alerting investors to iBio’s potential.
Updates from iBio have hit all the buttons on buzzwords and fanciful ideas to lure in investors. For instance, with iBio stock, investors can feel confident knowing its nanotechnology and plant-based methodology is being applied using the company’s trademarked FastPharming System to find a vaccine for the coronavirus. Thank you for that important public service announcement, right?
That’s not all either.
In other recent press releases iBio has joined the “Alliance for Biosecurity.” Isn’t that another step in the right direction? And if investors are still on the fence before hitting the buy button on shares, you should realize iBio’s FastPharming facility was originally funded through the U.S. Department of Defense’s DARPA and Blue Angel initiative. Quack, quack!
IBIO Stock Monthly Price Chart
Source: Charts by TradingView
Again, I could be wrong about iBio. Everything the company claims to be and to be working on as it relates to the coronavirus could be true. The company could be the goose that lays the golden egg rather than the duck I’m cautioning against. Still, even if iBio is the real deal and I’m off base doubting their good name and efforts, today’s pandemic will end. And that’s not good for IBIO stock in the long run.
Ultimately, the coronavirus isn’t a sustainable business model for iBio. And unlike biotechnology giants and COVID-19 competitors Gilead Sciences (NASDAQ:GILD) and Regeneron (NASDAQ:REGN), the stock isn’t well-positioned to move beyond this disease. What’s more, with iBio’s history of failed dealings during the past outbreaks and its shares still near $1.25 and six-fold above its latest campaign to literally save the world, I’d stress walking, if not running away.
For those investors that still want to waddle into IBIO, I’d recommend being hyper-vigilant. This is especially true given that it’s a stock that looks ready for a “shelter-in-place” order of its own.
Disclosure: Investment accounts under Christopher Tyler’s management do not currently own positions in securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.