The meme stock rally has taken off in recent weeks. Shares of everything from AMC Entertainment (AMC) to GameStop (GME) and BlackBerry (BB) have seen violent swings since late May.
Investors in the most well-know meme stocks have certainly benefited from this recent surge. However, one of the more intriguing developments of late is the seeming expansion of the list of stocks retail traders are focusing on.
Smaller, lesser-known companies are now making the cut. And Inovio Pharmaceuticals (INO) is one such company.
Now, some investors may wonder if the widening retail investor interest for meme stocks is good or bad for the “original” favorites such as GameStop or AMC. After all, a diversion of capital inflows into other stock could result in less buying volume needed to offset short interest in these stocks.
But that’s neither here nor there. Let’s discuss the meme stock interest in Inovio, and whether this momentum is likely to be maintained or not.
Why Are Retail Investors Jumping on INO Stock Right Now?
This biopharma play certainly has the right attributes to be granted entry into the short-squeeze club. It’s a company with a relatively high short interest, with approximately 25% of the company’s float currently being shorted. It’s also a relatively small-cap stock, with a share price under $10, so it’s affordable for the masses to load up on shares. (See Inovio Stock Chart on TipRanks)
Furthermore, biotechs and biopharma plays are inherently more susceptible to large, volatile price swings. For investors buying options, such companies tend to have better payoffs, particularly when implied volatility is low during a given period.
There are certainly some reasons why this stock is surging from a fundamentals perspective. However, it’s clear retail investors are pounding the table on various social media forums regarding the high level of short interest with INO stock as the only reason to own this speculative name.
Additionally, a tremendous amount of speculation has begun to build surrounding Inovio’s partnership with Regeneron (REGN) to develop an immuno-oncology glioblastoma therapy. The speculation surrounds the potential for Regeneron to swallow Inovio in an acquisition as a way to gain full control over the collaboration and 100% of the upside. These rumors appear to be just that – rumors. However, investors don’t need much of a catalyst today to speculate on a given stock. This juicy idea is likely behind some of the recent rally in INO stock.
Phase 3 Trial of Covid-19 Vaccine Another Key Catalyst
On June 8, Inovio announced the company was expanding its partnership with Advaccine for its INO-4800 Covid-19 vaccine. The companies intend to conduct a Phase 3 trial as part of the expanded partnership.
Indeed, the global vaccination race is one investors seem to believe has room for more players. As with other hot stocks such as Ocugen (OCGN), retail investors have proven fond of the potential these vaccine stocks have.
Inovio is an interesting company to look at, in the sense that it has multiple irons in the fire right now. If the company can hit it big with either an acquisition announcement, a vaccine approval, and/or a short squeeze, hopeful investors in OTM “lotto” calls many indeed strike it rich. Such is the glamour with this stock right now.
What Analysts Are Saying About INO Stock
According to TipRanks’ analyst rating consensus, INO stock comes in as a Moderate Buy. Out of 7 analyst ratings, there are 2 Buy recommendations and 5 Hold recommendations.
As for price targets, the average analyst Inovio price target is $14.50. Analyst price targets range from a low of $6.00 per share to a high of $35.00 per share.
For many investors, speculation of a potential short squeeze is reason enough to throw some darts at the board and see what hits. It’s a casino out there, and with “lotto” options plays taking off, a degree of FOMO (fear of missing out) is taking over the retail trading environment today.
Whether INO stock ultimately goes to the moon or not remains to be seen. However, one thing is for certain – this stock is likely to be very volatile in the coming weeks and months if this market activity continues.
Disclosure: Chris MacDonald held no position in any of the stocks mentioned in this article at the time of publication.
Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.