Key points:
- Genedrive keeps making the right announcements and yet…
- The GDR share price seem not to move sustainably in response
- It might be the market is waiting to see real cashflow
Genedrive (LON: GDR) shares have faded back a bit after the news yesterday from NICE. This looks to be a recurring event at Genedrive, something we should probably incorporate into our estimations of future price changes. Yes, clearly, announcements of licences and inspections and tests are all very well – but it looks like it's going to be cold hard revenue that really moves the Genedrive price in the future.
This could be thought of as being a little odd. For any share price is really the current value of what we think is going to happen. So, if a company applies for a licence, or gains one, or has equipment being tested by a large customer, all of these things should increase the value of the company. For they all increase the chance of future sales, obviously enough. However, here at GDR we're seeing a recurring pattern. The announcement of this or that good thing, a jump in the price, then a gentle fading back to around the starting position.
And we have seen this repeatedly over the past 6 months or so. As we know Genedrive developed a rapid covid test, that's a good thing to do at a time of pandemic. It also announced that it was applying for a CE Mark for the test. This led to a significant run up in the GDR share price. The thing is, this wasn't then followed by substantial sales of the test into the European market – the thing that a CE Mark allows. So, the stock fell back again.
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We've since been told that the Genedrive tests have UK approval which is again good – but it's possible to think that the bulk market at premium prices has already ceased given the retreat of the pandemic. Again, we've seen the share price fall back a bit from recent highs.
Then yesterday we had the news from NICE, which is to evaluate the Genedrive MT-RNR1 test. “UK's National Institute for Health and Clinical Excellence (‘NICE') has started an evaluation of the Genedrive® MT-RNR1 test via their Diagnostics Assessment Programme”
Which is great, obviously. Tests do need to be, umm, tested before they come into general usage. The way that Genedrive is going to generate substantial revenues is when one or more tests come into large scale and general usage. So, this is an obvious step forward. Yet we saw a little bounce in the GDR share price yesterday and a certain falling back today. Why's this?
It's impossible to be certain about such things, of course, but a useful thought is that we've had a series of announcements about tests and marks and developments and at times the share price has run ahead of the objective reality. We might well, therefore, be seeing a certain desire to note actual revenues and incomes before lauding the latest announcements. We're in the Jerry Maguire world now of “Show me the money”.
If this is true then this means that the likely impetus for a significant move in the Genedrive share price is going to be the announcement of some sales, as and when that comes.
