Atomo Diagnostics (ASX: AT1) share price is down another 16% today. This returns AT1 shares to somewhere close to where they were before all the recent excitement. Which is about what we said would happen. We most certainly said that the run up in the price was overdone because the linkage between Atomo and the event was really pretty slender. But this is the sort of thing that can - does - happen in small cap stocks.
As we said before about Atomo: “As to why Atomo is following Lumos up, there's this announcement: “It is noted however that on 3 July 2023, Atomo's partner, Lumos Diagnostics (ASX: LDX) announced to the market that it has received US FDA approval for its FebriDx test, which utilises Atomo's user friendly integrated Pascal test platform, making Atomo a critical supplier to Lumos for this approved product. It is possible that the price movement in AT1 could be attributed to LDX's announcement.” Other than that management don't know of any reason for the 140% rise in AT1 shares.
Having been wrong once already we're of course hesitant to be so again. But we do think that 1,000% (for Lumos) is a bit much, the announcement isn't that, that, exciting. It's also difficult to see what the revenue gain to Atomo is of the FDA approval. So, we'll retreat to the idea that clearly there's something of a frenzy going on here. And frenzies do end and prices fall back when they do. But it's never really possible to determine when that's going to happen - nor what price will be reached before it does.”
Atomo Diagnostics share price from Google Finance
We reiterated that point about AT1: “Atomo Diagnostics (ASX: AT1) shares are down another 27% to near their starting point. AT1 shares leapt on the link with Lumos Diagnostics - something we said was excessive for both shares. So it has proved for both of them. Yes, it's entirely true that Lumos had a test approved by the FDA. But the 1,000% LDX share price rise on the back of that was excessive. So it has proven to be of course. Atomo rose because it was a supplier to Lumos - but that was even more of a stretch, that that AT1 share price rise could be justified. As it has also worked out - the rise is pretty much gone now, back to the starting point in fact.”
We’d not want to be categoric and insist that there is no value in Atomo, nor that it might not rise again. But we think the price changes to do with Lumos might now be over - and they were more of a spasm than anything else.
