How to Buy Bionano Genomics Inc. (BNGO) Stock

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Bionano Genomics (NASDAQ:BNGO)

1.430

0.01 [0.7%]
1.37 – 1.45
1.16 – 8.2
1.44
289.70M
5.36M/6.62M
414.27M
289.70M
/0%
0.000
289.52M

The ongoing COVID-19 pandemic is another in the long line of reasons why people need to understand the genome better. Bionano Genomics (NASDAQ: BNGO) is making notable progress in this field, selling the most advanced hardware in its class.

How to Buy BNGO Stock

If you are a new investor looking to add Bionano Genomics to your portfolio, this guide will show you how to buy stocks, including BNGO.

  1. Pick a brokerage.

    Retail investors like yourself are buying stocks through the brokers. Brokers serve as licensed intermediaries that process your orders on the financial markets.

    Opening an account is a safe, streamlined process and it enables you to invest through your computer or even your phone.

    Here is a list of top consideration when picking a broker:

    What platform do you prefer to use? Are you seldom on your computer? Consider a mobile-friendly broker.
    What is the broker’s fee structure? If you are investing a modest sum consider a commission-free broker.
    Do you need to do extra research? If you are a person who enjoys reading the latest news and research, check if your broker provides such opportunities.
    Do you need access to other markets? Are you planning on investing in foreign markets or futures? Remember to check if your broker provides access to these.

  2. Decide how many shares you want.

    After you open and fund your brokerage account you’re ready to buy the shares. The number of shares will depend on the size of your portfolio, share price and risk preferences. The stock currently trades at $11, so investing $1,000 will get you roughly 90 shares. Since BNGO is a growth stock, you should dedicate a relatively low percentage of your portfolio, between 1% to 5%.

  3. Choose your order type.

    There are different types of orders you can place through your broker; thus, it is necessary to understand the basics before investing. You should test them on the demo account first.

    Market order: A simple order that instructs your broker to purchase a selected number of shares on the market. This type of order does not specify a price, just a number of shares. 
    Limit order: This type of order instructs your broker to purchase a selected number of shares only at a certain price (or better). If you set a limit order to buy 100 shares of BNGO at $11 per share, your broker will execute it only at (or under) that price level.
    Bid: This is the maximum price the buyer is willing to pay at the moment.
    Ask: This is the minimum price at which the seller is willing to sell at the moment.
    Spread: The difference between the bid and the ask. For example, if the bid for BNGO is $10.91 and the ask is $10.94, then the spread is $0.03. A narrow spread is a good indicator of the liquid market — your order should get filled faster.

  4. Execute your trade.

    After familiarizing yourself with the basics, you’re ready to execute the trade. Remember, you own the shares from the moment your order is filled on the market. This will come down to the type of the order but also on market conditions. You should check your broker statements periodically.

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BNGO Stock History

Bionano Genomics is a life sciences instrumentation company focusing on the genome analysis space. Founded in 2003, Bionano Genomics is currently headquartered in San Diego, California. A public company since 2018, BNGO has a market cap of $1.7 billion and employs 127 employees.

Its core product is the Saphyr system, a platform for detecting large structural variations of the genome with high sensitivity and low false positives. Currently, it is the most advanced system in this cytogenetics niche.

Saphyr optical genome mapping instrument. Source (Bionano Genomics)

The current business model comprises these:

  • Data service: Submit your sample and receive the data (full analysis is optional). Costs are $650-$950 per genome.
  • Rental agreement: Rent a Saphyr system for the duration of your project. It is $550 per genome with the commitment of 120 genomes per 6 months.
  • System and consumables purchase: Buy a Saphyr system, which costs $150,000 plus $550 per genome, or $450 for a 240-genome bundle.

After a parabolic run in the last several weeks, its stock is retracing from an all-time high at $15.69. In such a situation, Elliott Wave Theory (EWT) can show you potential pivot points in the price action. 

Developed in the 1920s by Ralph Nelson Elliott, EWT is a theory that financial markets have movement characteristics that repeat through history. If you have a keen eye for patterns, you might consider learning more with a free Elliott Wave Principle eBook.

The premise of EWT is that the price moves in 3 impulse waves in the direction of the trend, interspersed with 2 corrections. This creates a 5-wave pattern: impulse, correction, impulse, correction and impulse. The impulse is then followed by 3 waves in the counter-trend direction.

If you look at the BNGO chart, you can see the 3 main rules of EWT confirming:

  • Wave 2 never retraces more than 100% of wave 1.
  • Wave 3 is not the shortest of the impulse waves (1,3,5).
  • Wave 4 does not overlap with the price territory of wave 1.

EWT pattern on BNGO chart. Screenshot from Benzinga Pro on 2/24/2021

As BNGO looks to complete its corrective ABC pattern, you can use that information to plan your entry strategy. The company will report earnings on March 9, 2021, so look for volatility around that date.

Pros to Buying BNGO

BNGO is a leader in the digital cytogenetics niche. Its genome-imaging system, Saphyr, is arguably the most advanced hardware of its class today. Meanwhile, the global genomics market is expected to increase from $20 billion today to $80 billion by 2027. 

Beyond cancer and COVID-19, the company is expanding its research to autism spectrum disorder (ASD). In August 2020 it acquired Lineagen Inc, a provider of proprietary molecular diagnostics services for neurological disorders.

According to the BNGO CEO Dr. Erik Holmlin, only 3% of children with an ASD diagnosis get clinical genetic testing. The CDC estimates that 1 in 54 children born in the U.S. is autistic.

Autism in the U.S. since 1970. Source: (TACA)

Since autism is a $2 billion domestic market, this represents a significant opportunity for BNGO to grow its revenues.

Cons to Buying BNGO

Biotechnology is a high-risk and high-reward sector. It is also extremely volatile.

While the average beta (market measure for volatility) for this sector is 1.06, BNGO has a beta of 2.37. This means that your investment is likely to go through drawdowns before possibly turning a profit.

Furthermore, the company has raised funding through stock offerings twice in the recent past — one for $100 million and another for $230 million. This is important because it is diluting your investment — your shares are worth less after a stock offering.

Finally, the company is not yet profitable. Revenues have been declining in the last 3 years and the company had to raise cash to continue its operations.  

Looking for Revenue Growth in an Expanding Market

BNGO is a growth story in a highly volatile market. The company is working hard on increasing the revenues while making timely acquisitions and expanding into other niches.

Although the stock has already rallied a lot, technical analysis can help you in such situations. Remember not to speculate with more than you can afford to lose in a single stock.