Genedrive (LON: GDR) shares are up 17% this morning on no obvious piece of news. We suspect it's simply a change in sentiment. The last news was the NICE recommendation on genotyping. Which is interesting, no doubt about it, but the other issue is that the Genedrive test for this sort of genotyping is still in development. So, it's an announcement of if they get the test approved then there's a market for it. Which, again, is nice, but does rather fall prey to the ham and eggs for breakfast problem - if we had some eggs we could have ham and eggs for breakfast if we had some ham. Yes, Dr. Suess is a viable source of stock market commentary.
However we do have a basic problem about Genedrive ourselves and that's closely tied in with the volatility of the shares. Given that you and we are traders of shares we're all fine with volatility, indeed it's the very thing we're looking for. We are in the game for there to be share price movements that we can trade, not long term investments to clip dividends from. OK, so GDR shares are volatile, we should like that. And yet even then there's a certain worry. Because it does matter why a share is volatile.
Genedrive share price from London Stock Exchange
Think back a bit to when the world was all so very interested in covid tests. Genedrive announced that it had applied for, then received a CE Mark for its test. This set the share price off on a significant romp, hundreds of percents of price rises over time. This of course all faded back as well. Because a CE Mark isn't a thing of any great importance. Or rather it is but it isn't.
Yes, it's necessary to have a CE Mark to sell something into the European Union market. But it's not difficult to gain a CE Mark. It's just a matter of filling out the paperwork properly and then paying the fee. It is not - absolutely not - anything like an FDA approval which is the product of rigorous testing. But we all got the impression that a CE Mark was important - which is why the share price rise back then. And the fall back as the realisation sank in.
Now, it is possible to think that that's just good management. Boost the share price with a bit of decent PR. It's also possible to think that if management is led to, err, guide investor sentiment in that manner then what else are they guiding in that manner?
It's not that we're unhappy with Genedrive, nor that we think there isn't a real business in there. It's just that we're perhaps a little wary?
