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IBIO Stock Dip is a 2020 Opportunity as a Bet on a Coronavirus Vaccine


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IBIO Stock Dip is a 2020 Opportunity as a...

The new chief at iBio (NYSE:IBIO) has a tall order on his hands. Thomas Isett comes into the role as the pharma is busy trying to find and build the right weapons to beat the novel coronavirus threat that has crippled the world.

IBIO Stock Dip is a 2020 Opportunity as a Bet on a Coronavirus Vaccine

Source: Shutterstock

Up until Feb. 26, IBIO stock was a penny stock. Then it spiked 860% in a matter of hours but it has since given back most of its gains. At this point the debate centers on if it’s safe to buy the dip in IBIO stock. The answer is a “yes,” but for a speculative trade more so than a conviction Buy statement.

Since this was a coronavirus play we can assume that there are very few stock expert opinions on iBio and its kin. It’s a mad scramble race for the vaccine or the cure and there could be many winners. If Isett and his troops succeed in their mission, over time there will be demand every year and for every season.

So even though the mega spike came and went, there will be forward demand on the product. But first they have to get to it and therein lies the first assumption that this firm will indeed succeed in its trials and development of the products.

IBIO Stock has Support

IBIO Stock Chart

Source: Charts By TradingView

Quite frankly most of us are in the weeds when it comes to the science and the fundamentals bits. The easier part is to use the technical aspect of its chart and price action for clues on what lies ahead. The February rally was fast and furious but there is some clarity. On the way down, IBIO stock bulls tried to hold two important pivot points from last August. They are still holding on to that range even at the Monday lows. Clearly there is an effort to stop the slide.

While this floor is not bullet-proof yet, prior pivot levels are often solid support. This 85 cents per share level was also the top of the first major bullish candle on Feb. 27 so as long as the bulls can hold this zone all is not lost. Only time will tell how this plays out but for now, the technicals still promise a semblance of a base.

Every Biotech Trade is Speculating

Biotech and pharmaceutical stocks have always been prone to headlines, it’s the nature of their business. This makes every trade a speculative one so IBIO stock here is not any different.

While every portfolio needs a few of these types, they are dangerous and should be relatively small, and this is especially true during this crisis period. This week stocks are rallying even in the face of millions of people filing for unemployment. If this continues enthusiasm then iBio stock could levitate in sympathy. So as long as they don’t produce disappointing results investors will stick with them this year. This is to emphasize that its future success on Wall Street depends solely on successes in the lab.

To that point there is concern among investors that iBio still carries the black mark from its Ebola headlines of 2014. The company paid a $2 million fine for a false claim lawsuit. This is a risk factor that is hard to ignore but since we labeled this as a potential speculative trade then it’s par for the course.

Speculation is all based on risk and this is what makes the stock so volatile. Again, it is important to stress the small size of the risk because if the spike comes it would be big enough to pay well. But conviction is low and if investors bet a lot on it then it would be pure gambling.

Nicolas Chahine is the managing director of SellSpreads.com. Join his live chat room for free here. As of this writing, he did not hold a position in any of the aforementioned securities.

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