Arena-Mania (ARNA) Takes Center Stage and Everyone Has an Opinion
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The author of today's Seeking Alpha article on Arena Pharmaceuticals (Nasdaq: ARNA) made a prescient call about a 'bear raid' in the stock, which happened just shortly after its posting. However, investors with a horizon longer than an hour, should simply dismiss the article.
The article suggests that investors should sell Arena due to the parabolic nature of its stock and that the stock has fully priced in the approval of lorcaserin, which can come as soon as Wednesday June, 27th.
First there are no solid numbers behind the recommendation to sell. None. The only thing resembling a number the author inserts into the article are preceded by "I believe." Checking the authors bio, we find no mention of "pharmaceutical analyst" or "physician." Just "day trader."
Others that have crunched the numbers paint a very different picture of huge upside potential. Want some numbers? Here you go.
Better, the author even admits in the article the run might not be over, in saying, "The company is real and the product is legit, but that doesn't mean it should defy logic and never go down."
The author said "Above $12 in pre-market this morning, no investor in their right mind should be holding the stock." Well, given the potential multibillion dollar market for lorcaserin (there are, after all, 91 million obese Americans), a current market cap of $2.1 billion hardly justifies the potential.
He closes with the disclaimer: "I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. May initiate a long ARNA puts trade within the next 72 hours," clearly aiming to be a short seller on Arena, but not in the stock.
Are there other entrants? Sure. Vivus (Nasdaq: VVUS) has Qnexa and Orexigen (Nasdaq: OREX) has Contrave. Both are scheduled for FDA meetings in the future, with Vivus likely to get the nod first. Still, capturing 20 percent to 30 percent or more of a huge market is nothing to snuff at.
Now, criticizing articles is easy, coming up with them is tougher. But, Seeking Alpha generally has better quality arguments for both sides, with research and facts to back them up. Just saying you think Arena is overbought "because it is" shouldn't hold water with investors and traders, particularly considering there's still a handful of days until Arena's PDUFA date (June 27th).
Are we dedicated pharmaceutical analysts or MDs? No, but doing research is of prime importance when deciding where to place your money. Just know how to sniff out the fluff once you come across it.
Besides, there's actually a better SA article with actual "facts" and "analysis" also pounding Arena, calling Vivus a better choice.
Shares of Arena are down 16 percent today to $9.83.
The article suggests that investors should sell Arena due to the parabolic nature of its stock and that the stock has fully priced in the approval of lorcaserin, which can come as soon as Wednesday June, 27th.
First there are no solid numbers behind the recommendation to sell. None. The only thing resembling a number the author inserts into the article are preceded by "I believe." Checking the authors bio, we find no mention of "pharmaceutical analyst" or "physician." Just "day trader."
Others that have crunched the numbers paint a very different picture of huge upside potential. Want some numbers? Here you go.
Better, the author even admits in the article the run might not be over, in saying, "The company is real and the product is legit, but that doesn't mean it should defy logic and never go down."
The author said "Above $12 in pre-market this morning, no investor in their right mind should be holding the stock." Well, given the potential multibillion dollar market for lorcaserin (there are, after all, 91 million obese Americans), a current market cap of $2.1 billion hardly justifies the potential.
He closes with the disclaimer: "I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. May initiate a long ARNA puts trade within the next 72 hours," clearly aiming to be a short seller on Arena, but not in the stock.
Are there other entrants? Sure. Vivus (Nasdaq: VVUS) has Qnexa and Orexigen (Nasdaq: OREX) has Contrave. Both are scheduled for FDA meetings in the future, with Vivus likely to get the nod first. Still, capturing 20 percent to 30 percent or more of a huge market is nothing to snuff at.
Now, criticizing articles is easy, coming up with them is tougher. But, Seeking Alpha generally has better quality arguments for both sides, with research and facts to back them up. Just saying you think Arena is overbought "because it is" shouldn't hold water with investors and traders, particularly considering there's still a handful of days until Arena's PDUFA date (June 27th).
Are we dedicated pharmaceutical analysts or MDs? No, but doing research is of prime importance when deciding where to place your money. Just know how to sniff out the fluff once you come across it.
Besides, there's actually a better SA article with actual "facts" and "analysis" also pounding Arena, calling Vivus a better choice.
Shares of Arena are down 16 percent today to $9.83.
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