ADTX - Aditxt stock price has plummeted: avoid at all cost
2023-09-05 06:14:15 ET
Aditxt ( NASDAQ: ADTX ) stock price has been in the spotlight in the past few days. The shares plunged by more than 24% on Friday, one of its worst days this year. This sell-off continued on Tuesday, with the shares collapsing by over 14% in the pre-market session.
Avoid ADTX at all cost
Aditxt is a small company valued at over $7 million. The biotech firm has three products: AditxtScore, Adimune, and Adivir. AditxtScore is a product that provides a comprehensive profile of a person’s immune system.
Its Adimune product uses a novel approach that mimic how bodies induce tolerance to tissues. It will mostly be used in organ transplantation, including skin grafting and allergies.
The most recent results showed that Aditxt is a very small company. Its revenue in the three months to June was $220k while its gross profit was $35,240. In all, the company had a net loss of more than $4.23 million. That loss was significantly smaller than the $5.2 million it had in the same quarter in 2022.
The challenge for Aditxt is that its balance sheet cannot sustain this cash burn. It ended the quarter with $95,953 in cash and over $1 million in inventory. Its working capital was minus $7.59 million.
This explains why the company moved to the market to raise cash. It did that by private placement of $10 million, which it hopes to use to fund its working capital and other general expenses.
It is risky to buy Aditxt stock
Aditxt stock is an extremely dangerous company to invest in since it has real bankruptcy risks going forward. It is losing millions of dollars every quarter and will therefore need to continually raise capital. It had raised another $20 million in September last year.
The challenge is that the sources of capital are a bit limited today. For one, higher interest rates means that lenders will not prefer allocating funds to unprofitable companies like Aditxt. Holding funds in money market funds is much more profitable.
The other option will be to raise more cash in the public market. That will be a difficult thing to do as the stock’s collapse gains steam.
Most importantly, it is always recommended to invest in profitable companies with stable balance sheets. I believe that Aditxt has none of these qualities.
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