Shares of Senseonics Holdings Inc. (NYSEAMERICAN: SENS) have been on a huge run in the past few months that has accelerated as the WallStreetBets Reddit message board has grown to over nine million members. The stock is starting to be seen as a momentum favorite on that board, with many people talking more and more about it on there.
As more individual traders and small investors have bought the stock to be a part of the action it has risen to become on the top 100 most owned stocks list among Robinhood account holders. When a stock appears on Robinhood’s most owned list other traders start to buy it to create a buying herd and sometimes a frenzy. However, when such a frenzy turns into a manic peak the stock often peaks out and crashes back down.
To figure out what could be next for the stock we need to do some analysis. First what is this company? Senseonics Holdings Inc is a company with a market cap of over one billion dollars, with a fraction in revenue to the value, that manufactures medical devices. In particular it makes continuous glucose monitoring (CGM) systems for people with diabetes primarily in Europe, including flagship products Eversense and Eversense XL, which are implantable in the body devices to measure glucose levels in people with diabetes for a period of up to six months.
The company reports earnings on March 4 and often stocks will trend up into earnings if positive developments are expected to be announced along with them. As for the stock it has gone up so much that it is extremely overbought now on a technical chart.
Stocks that look like this typically spend months going sideways before they can go higher. So many people are up on it that there is a lot of people that are now willing to take profits while others have bought into a manic run and can become skittish and impatient as they tend to be rapid fire traders, especially if they trade via the Robinhood app. The stock now has a P/S ratio of 98 making it wildly overvalued on a fundamental basis. It is difficult to see it as an investment at this level so it has basically become a vehicle for daytraders.
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-Tim
