Market Overview

Citron Likes Recent IPO Schrodinger, Compares Company To 'An Early Stage Tesla'

Citron Likes Recent IPO Schrodinger, Compares Company To 'An Early Stage Tesla'

Notable activist short seller Andrew Left and his Citron Research firm said in a new report Schrodinger Inc (NASDAQ: SDGR) is the "most important IPO" in the past five years.

What Happened

Every few years a "Concept Company" files to list on the stock market, the latest being Tesla Inc (NASDAQ: TSLA) which disrupted and changed the transportation industry, according to Citron. There hasn't been an IPO with similar potential until Schrodinger Inc's (NASDAQ: SDGR) Feb. 6 IPO.

Left said Schrodinger's business is "too complex" to be explained on TV and hasn't been given enough attention in financial media outlets. In one sentence, the company's mission is to leverage its world-class scientific team with software and artificial intelligence to become the leader in molecular simulation.

The global pharmaceutical industry spends around $180 billion on R&D each year and Schrodinger can completely disrupt the drug development process.

Why It's Important

Schrodinger and Tesla were built to combine technology and software to solve humanity's problems. In Tesla's case, the company addresses lowering carbon emissions while Schrodinger can speed up the drug development process that "advances chemistry beyond limits ever imagined."

Left said both Schrodinger and Tesla were also backed by "marquee investors" who recognized the long-term benefits at an early stage. Tesla was backed by Google's Sergey Brin and Larry Page and later on its lifecycle by Oracle's Larry Ellison. But in Schrodinger's case, its roster of backers is "even more impressive" as it includes Bill Gates and D.E. Shaw founder David Shaw.

Wall Street is likely to "quickly" re-rate Schrodinger's stock "much higher" at a time when investors are willing to pay large premiums for pharma companies with disruptive potentials, according to Citron.

Schrodinger traded higher by 17% to $41.77 per share Thursday afternoon.

Related Links:

TFI Shares Surge As US IPO Begins On NYSE

SpaceX's Starlink Satellite Internet Business 'Likely' To Go Public


Related Articles (SDGR)

View Comments and Join the Discussion!

Posted-In: Andrew Left Citron ResearchLong Ideas Short Sellers IPOs Media Trading Ideas