Verastem, Inc. (VSTM) Stock: Why It’s Headed For The Bottom


Verastem, Inc. (VSTM) is working its way for to the bottom in the market in today’s trading session. The stock, focused in the biotechnology space, is currently trading at $2.37 after heading down -9.89% so far today. As it relates to biotechnology companies, there are a number of factors that have the ability to cause declines in the market. One of the most common is news. Here are the most recent trending headlines surrounding VSTM:

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Apr-04-19 04:05PM Verastem Oncology Announces Inducement Grants Under Nasdaq Listing Rule 5635(c)(4)
Apr-02-19 07:00AM Verastem Oncology to Present at the H.C. Wainwright Global Life Sciences Conference
Mar-18-19 04:08PM Edited Transcript of VSTM earnings conference call or presentation 12-Mar-19 8:30pm GMT
Mar-14-19 03:00PM 3 Penny Stocks That Could Make You Rich — or Regretful
Mar-13-19 01:59PM Why Verastem Stock Broke Down Today

Nonetheless, when making an investing decision, investors should take a look at much more than just news, this is especially the case in the generally speculative biotechnology space. Here’s what’s happing when it comes to Verastem, Inc..

Performance Trends That We’ve Seen From VSTM

While a decline in a single session, like the move that we’re seeing from Verastem, Inc. may cause fear in some investors, a single session move by itself shouldn’t be the reason for a decision to, or not to, buy a company’s stock. It is always smart to dig into trends experienced by the stock beyond a single session. When it comes to VSTM, here are the returns on investment that investors have seen:

  • Past 5 Sessions – In the last 5 trading sessions, VSTM has seen a change in price amounting to -21.26%.
  • Past 30 Days – The performance from Verastem, Inc. throughout the past 30 days comes to -23.79%.
  • Past Quarter – Over the past quarter, the company has produced a return on investment of -30.50%
  • Past 6 Months – Over the last six months, we have seen a performance that equates to -61.96% from the company.
  • Year To Date – Since the the first trading session of this year VSTM has produced a ROI of -29.46%.
  • Full Year – Lastly, over the last year, we have seen a change that comes to -42.75% out of VSTM. Over this period of time, the stock has traded at a high of -77.10% and a low of -9.20%.

Ratios Of Note

Looking at a few key ratios associated with a company generally gives prospective investors an understanding of just how dangerous and/or rewarding a pick might be. Here are some of the key ratios to look at when looking at VSTM.

Short Ratio – The short ratio is a measure of short interest. The higher this ratio, the more investors have a belief that the stock is going to tumble. Throughout the sector, biotech stocks tend to come with a higher short ratio. On the other hand, we tend to see a lot of short squeezes in the industry. Nonetheless, with regard to Verastem, Inc., the stock’s short ratio comes to 8.93.

Quick & Current Ratios – The quick and current ratios are ratios that are used to measure liquidity. Essentially, they measure If a company is able to cover its debts when they come due based on quick assets or current assets. In the biotechnology industry, companies are heavily reliant on the continuation of support from investors, these ratios can be bad. Nonetheless, several good picks in the biotech space come with good quick and current ratios. In terms of VSTM, the quick and current ratios come to 6.80 and 6.80 respectively.  

Book To Share Value – The book to share value compares the the price of shares to the current book value of assets that are owned by the company. when it comes to Verastem, Inc., the book to share value ratio equates to 1.69.

Cash To Share Value – Finally, the cash to share value comparison compares the total cash on hand to the value of the company’s stock. Several early stage biotech companies struggle to keep cash on hand. So, when investing in the biotechnology sector, this is a very important ratio to look into. In terms of VSTM, the cash to share value comes to 3.40.

What Analysts Think About Verastem, Inc.

While it’s never a good idea to blindly follow the opinions of analysts, it is a good idea to consider their analysis in order to validate your own when it comes to making investment decisions in the biotechnology space. Below are the most recent moves that we have seen from analysts as it relates to VSTM.

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Jul-13-18 Initiated BTIG Research Buy $17
May-02-18 Initiated Seaport Global Securities Buy $14
Mar-08-18 Initiated B. Riley FBR, Inc. Buy $15
Sep-07-17 Reiterated H.C. Wainwright Buy $6.50 → $10
Apr-13-17 Initiated Oppenheimer Outperform

Show Me The Big Money

Humans that are into investing seem to be infatuated with the term “Smart money follows big money.” It makes sense. Big money became big money by making smart decisions in the market. So, by following the moves of big money institutions and insiders, we can get a glimpse of what market pros think about a stock. When it comes to big money interest in VSTM, here’s what we’re seeing:

Institutions own 61.10% of the company. Institutional interest has moved by -0.08% over the past three months. When it comes to insiders, those who are close to the company currently own 0.20% percent of VSTM shares. Institutions have seen ownership changes of an accumulative 28.99% over the last three months.

What’s The Float Looking Like?

Traders tend to like to know the counts of shares both available and outstanding. In regard to Verastem, Inc., currently there are 73.41M and there is a float of 67.16M. These data mean that out of the total of 73.41M shares of VSTM that are out there today, 67.16M are able to be traded in the public space.

Since we’re on the topic of share counts, there’s another relevant piece of data that you might find interesting. That would be the short percentage of the float. Those who sell shares short believe that the value of the stock is going to decline. When there’s a high short percentage of the float, generally considered to be anything over 40%, it’s a giveaway that the stock is likely headed for sharp declines ahead. Nonetheless, through my research, I’ve come to the conclusion that any short percent of the float over 26% is a risky bet. When it comes to VSTM, the short percent of the float is 36.01%.

What We’ve Seen In earnings results

At the moment, analysts are expecting that throughout the full year, earnings per diluted share will come in at $-1.01. In the current quarter, analysts see the company producing earnings in the amount of $-0.47. Over the last 5 years, VSTM has generated revenue in the amount of $0 with earnings coming in at 9.30%. On a quarter over quarter basis, earnings have seen movement of 64.50% and revenue has seen movement of 0.

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