Is ORMD Stock a Solid Long Term Investment?

Stock Market

Oramed Pharmaceuticals was founded in 2006. Today it is a publicly traded company specializing in medications for diabetes. More specifically, the company places an emphasis on oral medications for type 2 diabetes. Many potential investors wonder if this company might be a good option as a long-term investment, as there are some cases where medical companies can be a very good option for such things. That being said, there are several things that have to be looked at. For example, you need to know the history of the company from a financial standpoint as well as its performance in the stock market. It’s also important to know what that stock is selling for today and then review analysis from stock market analysts in order to make an educated decision regarding how the stock is predicted to perform in the future. It’s also worth noting that whether or not you choose to purchase it as a long-term investment option will largely depend on how long you want to hold on to that or any other stock. Some people only want to hold on to something for about a year while others will keep the stock for as long as five years in hopes of making a great deal of money. All of these factors come into play in your decision so it’s important to carefully look at each and every one.

Today’s Trading

Currently, the stock is selling for a very reasonable $8.40 per share. That’s actually down by 2.27% over yesterday’s trading, enough that some investors are starting to wonder why. It’s important to take a deep dive into this or any other stock that you’re considering purchasing. Simply realizing that a stock has taken a downturn of more than 2% over the course of 24 hours isn’t enough to completely erase it from consideration for a long-term investment, as there are a number of reasons that this might be happening. However, it does mean that you need to know as much as you can possibly find out about the company, their stock options and what they plan on doing in the future. All of this will help you make a better decision as you move forward. Remember, the stock market isn’t always an easy game to play and there’s always a certain amount of risk involved. Therefore, you would be doing yourself a disservice not to find out as much information as possible. In fact, you owe it to yourself to discover as much information as you possibly can because it is your money that you’re playing with, after all. Simply entering into a decision to purchase this or any other stock without thorough investigation is reckless. When the goal is to make money, that doesn’t make a lot of sense. That’s why it’s important to get down to business and find out everything you can about this company.

A Possible Pattern?

When you look at today’s trading and you realize that the stock has dipped by more than 2%, you might initially think that it’s a one-time thing or it’s because of something within the stock market itself as opposed to being something directly related to the company. However, going back and looking at things for a longer period of time might give you a different idea. Back in November of 2021, the company found its stock tumbling by more than 11%. What was the reason for this? The company suddenly announced an at-the-market offering in the amount of $50 million. It was something that a lot of people didn’t see coming, at least as far as those that were on the outside looking in were concerned. Anytime that a company does virtually anything related to finances or stock options, it’s going to have an impact on their shares in one manner or another. Suddenly announcing that they’re basically putting their company on the market in hopes of getting someone to buy it is worrying, to say the least. Why do they suddenly want someone to buy the company? When you’re talking about a pharmaceutical company, you would think that the asking price will be a lot higher than $50 million, too. That means that you have to start asking yourself why they’re trying to sell the company for such a low price. In short, the whole situation made most investors feel like something was extremely wrong at the company and like it was time to get out while they still could. As such, people started selling off their shares right and left in hopes of at least breaking even. If you’re considering purchasing the stock as a long-term option, you have to think about this and then ask yourself what exactly was going on within the company at that time and whether or not the situation has resolved.

What Was Really Happening?

As previously mentioned, this type of situation would cause investors to ask questions in any capacity, but there was something going on here that made this particular situation seem even more dire. Throughout the course of 2021 (prior to November), the company’s stock had grown by more than 200%. A lot of people started asking how a company that had grown so much in the course of 10 months was now suddenly throwing itself on the market and hoping that someone would purchase it for a relatively low price. Fast forward from November to the first part of 2022 and you’re seeing a very different picture with this particular stock. For the overwhelming majority of March of this year, the stock was behaving as if it were on a rollercoaster. One day it would be up, the next day it would be down. There were times when there were dramatic fluctuations in the price of each share of stock within a single 24-hour period. In addition, the stock never regained its peak price from 2021. As a matter of fact, it didn’t even come close.

That’s concerning enough in and of itself. However, the story actually gets even more concerning. By the time that April of this year had rolled along, the stock had hit a low point and more or less flattened out. As a matter of fact, it’s only shown a single sign of life throughout the entire month of April. Granted, it’s only a few days into the month, but it makes one wonder what is coming for this particular stock in the future. It almost seems as if it’s plateaued and is just sitting there. That makes investors wonder if it’s ever going to find its way back out of this slump or if those who already have stock would be better to just sell it and forget about it. When you’re thinking about purchasing it as a long-term investment option, this is of course something that you have to think about very carefully. If the stock doesn’t recover, there’s really no point in buying it even though it can be had for less than $10 per share. It doesn’t do you any good to purchase stock just because it’s cheap when there may not be any reasonable chance of it recovering enough to be worth your while. If you plan on holding on to it for 12 months or so, you might end up spending a lot more money than you stand to make. Even if you want to hold on to it for three to five years, it’s important to find out exactly what’s happening within the company before you end up investing in something that isn’t going to give you a return on your investment, even after that much time has passed.

Strictly by the Numbers

Perhaps the most alarming thing here is that when you go back and look at how much the stock was selling for just prior to it tanking in November of 2021, you will see that it was selling for more than $27 per share. As soon as the announcement was made about putting the company on the market in November, that amount plummeted and it has never recovered since. As a matter of fact, it has scarcely even leveled off. If you look at the numbers on a chart, it almost looks like the price of the stock fell off a cliff and never could find its way back up. Today, it’s available for less than $10 per share, meaning that it’s lost far more than half of its value in a matter of months. If you really examine the numbers, you’ll find that it’s actually worth less than one-third of what it was worth back in November, and you’re only talking about a time span of about five months. That should send up all kinds of warning bells and it genuinely should make you think twice about purchasing the stock, whether you’re thinking about doing it as a long-term investment or anything else. Of course, there is always more to be uncovered. There is still a very important question that has to be answered here, namely what exactly happened in the company that caused everything to derail so suddenly. That requires more investigation, but it’s a crucial part of finding out whether or not you should be investing in this stock.

A Potential Answer

Upon further investigation, you’ll find that even though the stock was performing well prior to November of 2021, there were problems within the company that had been signaling that something was going wrong for months. As a matter of fact, the company saw a loss in revenue during the first two quarters of 2021 and then turned around and experienced another loss during the fourth quarter. Despite the fact that the stock had grown by 200%, the company itself was clearly on shaky ground. It certainly didn’t help that once January of 2022 rolled around, the company reported yet another loss. All in all, they have reported significant losses during four of the last five quarters. While it may not be such a big deal for a company to report a loss during a quarter and then show a rebound, it’s much different to have a company that reports loss after loss. You don’t have to be an expert in economics to know that when a company continuously reports losses, they are more or less hemorrhaging money and they can only continue operations for so long before something has to give way. That definitely explains why they suddenly threw themselves on the market for only $50 million in November, hoping that someone would purchase the company. Apparently, things have been going wrong for quite some time and it would seem that executives at the company had chosen to do nothing about it until they simply had no other choice.

It’s worth noting that some stock market analysts believe that the company’s worst days are behind them. They have new investors that are supposedly pumping cash into the company and as a result, some stock market analysts believe that it would be a good idea to invest in this particular stock as a long-term investment. They think that by the time you’re ready to sell the stock, it will have not only recovered, but exceeded the previous peak that it was enjoying last year. Of course, not all stock market analysts agree with this assumption. There are probably just as many who believe that you should avoid this particular stock at all costs. Is it a good time to decide to purchase the stock as part of your portfolio, provided that you don’t plan on selling it for at least a few years? Most stock market analysts would say that you could do much better by investing in other companies. At the moment, there are still a lot of unanswered questions with this stock and no one really knows if the new investors are going to make a difference in the long-term. Therefore, most agree that you should pass on this one and look for something else.

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