To penny stock investors, Senseonics Holdings (NYSEAMERICAN:SENS) stock should be fairly interesting. Indeed, it has shown massive volatility since taking off in the latter part of December. But it still remains up about 350% since taking off a few months ago. It may be more than a flash in the pan.
So what is this company about, anyway? Senseonics Holdings has created the first long-term, continuous glucose monitoring system for managing diabetes. The system consists of a sensor (implanted under the skin), a removable transmitter which sends data every 5 minutes and a mobile app for users to view their data at any time.
SENS Stock: Inherently Volatile
The world of penny stocks is inherently volatile. SENS stocks is a penny stock trading at $1.82 per share as of the afternoon of May 12. I’d simply like to put some numbers to that volatility so that as a reader, you can get a clearer picture of what can be gained or lost.
As I mentioned, SENS stock has more than tripled in price since late 2020. So, while those who bought in at that time have ridden a bumpy ride, they are up on their initial position.
If they bought in just before it took off, and somehow timed the Feb. 16 peak, they’d have gained 1,125% on their investment.
That’s all well and good, but that’s a rose-tinted glasses scenario. There certainly must be investors who bought in on Feb. 16, at the peak of SENS stock. Let’s just assume they held on since then and haven’t sold their shares. Unfortunately for them, they have seen their investment decrease in value by more than 60%.
That’s the game that is penny stocks. It’s not for the faint of heart. That said, Senseonics Holdings is operating in a growth market and there is an abundance of reason to be hopeful.
A report by Allied Market Research indicates that the diabetes care device market is a growing one. In 2016 the market was valued at $6.867 billion and expected to reach $10.208 billion by 2023. That is close to a doubling of the total market, and equates to 5.8% compound annual growth within that period.
A separate report by Grand View Research estimates that the market is much larger than what Allied Market research indicates. Their report states that the market value was already $23 billion in 2019 – Vs. $10.208 billion by 2023 – and anticipates 7.8% CAGR through 2027.
Whatever the exact number, the conclusion is the same: the total addressable market is clearly growing.
Senseonics Holdings will release earnings on May 13. This article won’t have the benefit of viewing those results but we can look back at the March 10-K. Senseonics is not a pre-revenue company, but it is not a profitable one either.
The company nearly reached $5 million in revenues in 2019, only to see that figure decrease to $1.4 million in 2020. Its 2019 net loss of $115 million ballooned to $175 million in 2020.
SENS stock is analogous to a biotech pharmaceutical stock. It has significant development costs and regulatory hurdles to overcome. Thankfully, the regulatory hurdles have been overcome. But as a result of other factors it doesn’t possess a sterling set of financial statements.
Yet, it exists in a growth sector, and it’s easy to see how it could quickly see its revenues skyrocket, and its losses dissipate or even turn positive. Again, a lot like a pharmaceutical development company.
SENS Stock: The Verdict
In the long-term, given its FDA approval, I believe SENS stock should be able to rise beyond current prices. The short term is more of a guess. I’d say that it’s worth a calculated shot, though. The sector is growing, but wait until May 13 earnings shed more light on its situation.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.”