ATAI - After Falling 60% in 1 Year Is Atai Life Sciences Stock Still a Buy?
2023-04-20 08:55:00 ET
With its shares down by 60% in the last 12 months and a recent layoff affecting 30% of its workforce, it's fair to say that Atai Life Sciences (NASDAQ: ATAI) is having a rough go of things lately. Nonetheless, per bombastic predictions by Wall Street analysts, the stock could potentially explode upward by 527% this year.
When faced with such a discrepancy between recent performance and projected future returns, investors are right to hesitate to invest in this super-risky biotech stock. Let's take a peek at what's going wrong with Atai so that we can figure out if it's capable of surviving in the near term, and if it is, whether that makes it a buy.
In case you aren't familiar, Atai is a biotech that's developing a handful of mental health treatments based on psychedelic molecules like MDMA via several subsidiaries and variable-interest entities. It also has minority stakes in other operators like Compass Pathways that are doing the same type of development. Atai doesn't have any recurring revenue as of yet, and it probably won't until it can commercialize a drug within the next few years. That effectively means its business model is to fund research and development (R&D) on its behalf.
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After Falling 60% in 1 Year, Is Atai Life Sciences Stock Still a Buy?