Beginning in mid-January, retail investors on Reddit’s WallStreetBets chatroom began banding together to buy shares and call options in stocks with very high levels of short interest.
While many of the reasons behind their supposed cheapness varies from company to company, one of the few constants I’ve witnessed is the argument that their current share prices are significantly lower than their all-time highs.
For some context here, AMC shares traded north of $35 in late 2016.
For example, when AMC Entertainment’s share price topped $35 in late 2016, its market cap neared, but never crossed, the $4 billion market-cap threshold.
Put another way, its share price has declined by around 75% since late 2016, but its market cap has grown by roughly 15%, all because the company’s outstanding share count has ballooned higher.
Shortly after it became a public company, shares of Sundial hit $12, equating to a $1.1 billion market cap.
In less than two years, Sundial’s share count has grown from less than 100 million to 1.66 billion outstanding.
In June 2018, when the company’s share price quickly jumped to about $3, its market cap hit approximately $275 million.
Although Zomedica now has plenty of cash to fund its research for years to come, it’s a billion-dollar stock that began generating revenue less than a month ago.
What’s more, the company recently authorized an at-the-market program that could see another $800 million worth of shares sold.
With the company unlikely to be profitable for years and strangled by its debt, it’ll need shareholders to authorize a huge increase in its outstanding share count next month to have any chance at long-term survival.