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Progenity | $1.35 - Short Squeeze Part 1 Here
This is not financial advice nor recommendations. This is purely our own thoughts and opinions regarding the matter discussed below for entertainment purposes. This is not advice and is never intended to be.
A correlation between diffraction patterns and short squeezes, PROG is demonstrating the early signs
Athyrium possibly the main short, partial evidence is mounting, no clear evidence yet
My personal price targets and forecasting
Progenity Inc: PROG
Short Squeeze Pattern for PROG
As I am an optical-mechanical engineer, I have come to see a pattern with the laws of nature and the short squeeze phenomenon. The correlation is obviously not 100% accurate but take a look at the diffraction pattern of a laser going through a single slit and then look at some short squeeze charts. Typically you see a wave-like increase in magnitude over time until you reach the final squeeze. There is not any research or fundamental charting technical analysis. I would take using this method as something to think about but not something you should be 100% certain of happening. I potentially have biases towards Progenity since I am an owner of PROG shares.
Physics graph of a single slit diffraction experiment:
This picture above shows how laser light looks on a screen after passing through a single slit. I think that there is some correlation between this phenomenon in nature and what our man made short squeezes look like. The width of the slit controls the width of the pattern, I’d associate this with the time scale. The relative intensity shows correlations with the amount of trading volume during the time period and correlates to underlying stock price. I have a few widely known short squeezes shown below to show you for comparison to this phenomenom. Let me know what you think!
Volkswagon short squeeze when it went over $100:
GME Short Squeeze (Blue line is my rough approximation of a diffraction pattern)
Note that the blue arrow is where I think we are in the Progenities cycle. You can also fundamentally argue that GME did have more awareness due to the business being spread across the United States. What I think happens is you get waves of people, and more and more people start to double down as shorts try to respond. Less people shake out on the way down and on the next round upwards, more investors buy in.
AMC Short Squeeze (6 month chart) (blue line is my rough approximation of a single slit diffraction) This shows the wave-like nature at the beginning of the short squeeze for AMC.
Progenity’s Chart and prediction using the diffracton pattern correlation:
For this prediction, if you look at this like a single slit diffraction pattern, it will dip a bit and then move up in proportion on the next leg up. It seems that it takes 3-4 noticeable waves or so before the squeeze commences. I think epic price increase will happen before November 20th which is before Progenity can take any more action to dilute the stock. The reason I am making this squeeze correlation with Progenity is that I am seeing waves of people and trading volume show up. At first, we had 600 watchers on Stocktwits, and then within a few weeks to months now we have 14,000 and way more people finding out about this company as they see it is fundamentally a valuable company with their medical technology.
The reddit community r/Progenity_PROG has skyrocketed to over 740 members over the past 2.5 weeks. Another honorable reddit community as well r/ProgStock has blown up to over 620 members as well!
Final thoughts on the diffraction pattern correlation:
I just thought this would be a fun look at what we could be in and another perspective to think about. This may not be the best way to look at short squeezes, however Prog’s chart looks very similar to the early beginnings of a diffraction pattern.
Is Athyrium Capital Management really the culprit?
This company has been scapegoated as the one shorting Progenity. They are a structured capital management company that was little known by retail before this. I am not completely sold on this yet, but there is a substantial amount of evidence pointing in their direction. I have personally messaged them to get a response on their strategy to also clear their name. I will let you know if I receive something back. Some highlights about how Athyrium operates their business:
They like assets in life sciences such as progenity that they invest in because of their nature to be bought out by larger pharma.
They structure agreements to limit their downside risk: They use things such as convertible notes, hedging strategies, warrants and possibly shorting as well.
They make money in main 3 ways
Make money from interest that debt they issue to Progenity (warrants) or private placements, both of these can be considered offerings.
Hedging themselves while buying more of the stock on the way down
Getting the company acquired above their dollar cost average.
All of these ways are legal and even stated in Progenities IPO prospectus that they persons involved in offerings are allowed to naked short and covered short the company stock. This is to maintain price so that they can negotiate deals or to stabilize. Which essentially means they can manipulate the stock price. Which is a bit scary. I am surprised this was passed through the SEC without a problem.
The argument against why Athyrium is not shorting is that they would be committing an illegal crime holding material information and using it to manipulate a stock to make more money. Here’s some thoughts I received from a CFA (thanks for your thoughts if you are reading this by the way, you know who you are :) ) this week on this.: “In the investment world, using material non-public information to trade on is the definition of insider trading. Shorting the stock knowing what was going to happen is exactly that. Jail time and loss of profits as we saw with Martha Stewart. They can try to rationalize it as stabilizing the stock all day long, it does not matter. It comes down to rational investor theory. Which is would a rational person want the information they possess which the public does not have to make an investment decision, absolutely.
They need to disclose all related positions whether direct or not, again, it would come out and they would have the crap sued out of them by the company, shareholders, the former CEO, etc for holding the stock down while trying to sell the company. PROG has too much potential regarding the pipeline to need to manipulate the stock trying to get a sale, and again, if the company does not have that potential and they know otherwise, then that is exactly insider trading.
I agree the offering that just happened was poorly timed and sends the wrong message as well as creates speculation, but until there is real proof it is only speculation.”
The facts are that Progenity has been shorted heavily and the price has been suppressed by doing the shorting. We also have seen some peculiar behavior as Progenity diluted their stock just as it was gaining momentum during a trend upwards in the middle of the day. This dropped the stock 40% from where it was sitting. $2.10 to 1.36 in a matter of minutes this past week. I think this was possibly done to stop the price from rising, possibly for buyout reasons.
My final thoughts on this: I think Athyrium possibly could be shorting Progenity however there is no clear evidence that they are. They haven’t stated anything on their form 4s and the only mention of shorting is in their hedging strategies on their website.
I think that there may be other’s short selling the stock. Athyrium has been a large majority stakeholder in PROG for quite some time and has funded Progenity to continue their R&D. I think we need to uncover a bit more evidence to fully blame Athyrium. Here is an excellent article covering why Athyrium is possibly shorting Progenity The overall state of the PROG stock is that it is heavily shorted and you can read that from many places and get current data from R/Progenity_PROG or r/ProgStock. This company is in for a squeeze, it’s just dependent if enough investors see the underlying value of the company and are compelled to invest in them.
Current Price: $1.35
2 Month Price Forecast: $7-10
We think that the stock price of Progenity will rise to a range of $7 to $10 within the year of 2021. The business has enough money and will not dilute the stock anymore.
Price Target in 1 year: $12 - 15 As the market catches up to the reality that this company could bring to healthcare, we may see it go over a billion dollar valuation again.
Final thought on PROG: This company we think is sound for appreciation. Whether a short squeeze/buyout or even business turnaround, we think this stock price will appreciate in the near term and could possibly ascend quickly under conditions.
Disclosure: We do own PROG securities/shares at the time of publication.
All stocks talked about we have invested in, and do not intend to give advice nor recommend acting upon the information.
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Until next week,
and the Optifinancial Team
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