If you haven’t been paying attention to the small-cap land, here’s one name that’s turned some heads over the past few sessions – Ocugen (OCGN).
What began as a promising ripper, driven by a solid news catalyst:
… turned into a disaster last night, as the company dropped a stock offering, right after the market closed:
And while yesterday’s buyers are understandably pissed, let’s review what exactly happened and try to answer the key question of all – is OCGN about to have another run?
It all began on Friday night when the company announced the FDA had lifted a clinical hold on the company’s investigational new drug application to evaluate a Covid-19 vaccine candidate.
While that may not look like much on the surface, it sure instilled confidence in many investors – remember this insane after-hours move I showed earlier?
It didn’t hurt that the company is one of the most shorted names either – according to Finviz, short interest stands at over 28%.
When a name so hated upticks 50% in half an hour – traders get interested!
Heck, our own small-cap specialist, Jeff Williams, who is known for being very strict and selective, had it on his watch!
Here’s the idea he laid out yesterday morning:
Jeff ended up skipping the trade altogether, which proved a fruitful decision – as I already mentioned, late last night the company announced a stock offering.
This morning, we found out the pricing details: OCGN offered 15.97M for total proceeds of $53.5M.
Once we do the math, it comes out to $3.35 per share.
And this is where it gets interesting!
Can OCGN Have a Post-Offering Squeeze?
It was the pricing that really caught my attention – $3.35 per share is NOT a bad price!
This is just a tad lower than where the stock’s been ranging for the past few weeks:
So the stock costs as much as it did just a few days ago, but now: one of the company’s risk factors is removed + they’re better capitalized, with no risk of another offering in the near term.
Oh, and did I mention that the shorts are probably sitting in the stock as comfortable as ever?
Now, I’m not saying to blindly buy and pray, but the market seems to agree with some of the logic:
The stock is holding strong support at $3.35 & trading above the offering price – never a bad sign!
I want to see this trend continue – ideally, I hope OCGN stays in the $3.40-$3.60 range over the next few days and gradually advances higher, putting some pressure on the shorts.
And once we regain $4, it’s literally game over!
OCGN is definitely a watchlist item for me in the next few sessions – if you want to see my entries and exits live, be sure to pay me a visit in the Master’s Club!