Is Fulgent Genetics Stock More Than a One-Hit Wonder?

Our MBAs at Nanalyze are constantly tweaking our disruptive tech investing methodology, adapting our metrics as we play through one of the weirdest post-bull runs in Wall Street history – and that’s saying a lot. Gone are the days of growth at all costs, but that’s been the mantra of the tech sector for a long time now, so it will take some effort to turn that ship around. In the meantime, we’re looking for other ways to assess the health and long-term outlook for disruptive tech stocks. One metric is to check out gross margins, which represent total sales revenue minus how much it costs to produce the goods or services for the marketplace. Bigger is better, because the larger the gross profit, the more likely a company can become consistently profitable without relying on debt or diluting shareholder value. 

A relatively thin gross margin is one reason Invitae (NVTA) stock is dropping like a rock. A genetics testing company that not too long ago was a rapidly rising star in the industry, Invitae surpassed a much larger rival in just a few years. Now, saddled with debt, Invitae will likely have to raise more capital to survive over the next few years. In November 2021, when we last covered the company, it had a market cap of $4.5 billion. Today, it’s valued at less than $1 billion. While we still believe genetics sequencing and testing, as well as related areas like