NovaBay Pharmaceuticals NBY Stock News

NovaBay Pharmaceuticals, Inc. (NYSEAMERICAN: NBY) is having a rough start to the trading session this morning, down nearly 15% just after the opening bell. The declines follow large declines that took place yesterday, leading many to wonder what’s happening.

After all, this same stock rocketed more than 500% recently after announcing the launch of a product on Amazon.com (NASDAQ: AMZN). Nonetheless, there’s a good explination for the declines, and believe it or not, it’s nothing to be concerned with. Here’s what’s going on:

Stop wasting your time! Start finding winning trades in minutes with Trade Ideas!

NBY Stock Is A Victim Of Normal Movement

In the stock market, movement tends to happen through a series of overreactions. When positive news hits, as was the case for NBY just days ago, we tend to see dramatic gains in the value of the stock centered in the news.

However, these dramatic gains are often followed by profit sharing. This is when traders see the top ahead and decide to get out of the trade before the stock starts to fall back down. While the stock will dip during this time, investors, not in it for the quick runs, will hold on, keeping a floor on the stock.

In the case of NBY, I believe that this is exactly what’s going on. After all, the company recently announced news that will likely lead to significant revenue, opening the door to a long term opportunity. After gaining more than 500%, the stock is now dipping. However, I believe that the dip represents an opportunity to get in on the long run opportunity at a discount.

A Look At The Long Run Opportunity

The product that NovaBay Pharmaceuticals launched on Amazon.com is known as Avenova. The product was produced to remove bacteria and debris on and around the eyelid that have the potential to contribute to bacterial infections. Interestingly, it’s these bacterial infections that contribute about 85% to the dry eye market.

Taking a look at the dry eye market outlines the opportunity in a big way. At the moment, it is estimated that the dry eye market will reach a value of more than $7.7 billion annually by the year 2025. While eye drops and other treatments will continue to take a large share of this market, preventative options like Avenova eyelid and eyelash spray are also likely to see strong sales.

Because NBY was able to get Avenova on Amazon.com at an affordable price, chances are that the product sales will ramp up quickly. Moreover, the lack of a need for a prescription to access the medication is likely to further bolster sales.

Considering the fact that the company’s market cap is sitting around $36 million, less than 1% of the market size in the dry eye space, even accessing a small portion of this market could lead to tremendous value for investors. While it is unreasonable to expect that Avenova will take the lion’s share, or even 25% of the market, it is also unreasonable to suggest that the product doesn’t have the potential to take 1% of the market, which would be a big win for NBY and its investors.

Final Thoughts

Often times, when stocks fall, like what we’re seeing from NBY, the fear leads to abandoment of great opportunities. While it’s never a good idea to make a decision to invest in a stock based on the opinion of a writer like me, I implore you, do your own research.

Once you dig in and verify the size of the market, the potential of the opportunity, and the incredible opportunity that a launch on Amazon.com represents, chances are that you’ll come to the same conclusion that I have. Even after recent and incredible gains, NovaBay is a highly undervalued play that’s worth your attention.

Stop wasting your time! Start finding winning trades in minutes with Trade Ideas!

What Do You Think?

Where do you think NBY stock is headed moving forward? Join the discussion in the comments below!

6 COMMENTS

  1. NBY will be a great stock to buy at this price $1.73 today. It just got on amazon 2 days ago so give it a chance how well the product sells.
    I am a buyer here at this price or may go long with call options.

  2. I bought 800 shares at $3.75 – taking a punch to the stomach right now but with the recent inside buying I am optimistic. Hopefully it runs.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.