Here’s Why Invitae Stock Can’t Stop Falling

May 25. 2022. 6 mins read

Loss aversion is a psychological concept where humans are shown to feel the pain of loss twice as much as the joy of gain. Even the perception of loss can result in pain. That’s why investors sweat paper losses when they haven’t actually lost anything. Over the past six months, shares of Invitae (NVTA) have dropped more than 80% leaving us with a position that’s now 86% below our cost basis. As we always say, the only reason to sell a stock is if growth subsides or our thesis changes. Invitae is a leader in genetic testing with revenue growth that shows no signs of stalling.

Investor deck showing Invitae's 2022 guidance
Credit: Invitae

Provided Invitae hits their 2022 guidance, all should be well. So why is this life sciences stock dropping like a rock?

Why Is Invitae Stock Falling So Fast?

MBAs can create as many spreadsheets as they like, but the value of a stock will always be what investors are willing to pay for it. Today’s investor is putting less value on the promise of future growth, which is why many disruptive tech stocks are plummeting. That’s understandable, but more seems to be happening with Invitae. Investors may be punishing the company because the road to profitability is a long one, and the firm’s capital raising options are limited based on their past actions.

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