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Genedrive Shares Boom Now Over – Covid Testing A Dead Duck?

Tim Worstall
Tim Worstall trader
Updated 7 Feb 2022

Trade Genedrive Shares Your Capital Is At Risk

Key points:

  • Genedrive started to leap on CE Mark announcement
  • This has now faded back to near starting point
  • Is the boom in covid testing now truly over?
  • Genedrive Stock Forecast

Genedrive (LON: GDR) shares started out at 17.5p, just before they announced that they’d applied for a CE Mark for their rapid covid test. Those Genedrive shares then soared to 70p and have now come back down again to 20.5p. So, what’s going on at Genedrive?

The answer is probably more than just fun and games with fashionable nostrums in stock markets. It’s, perhaps, really about competitive markets added to the manner in which covid is coming to its close. If all of this had happened two years ago then clover would be being rolled in. Even a year ago – perhaps. But now? There are too many other people who can do the same thing just as the thing being done by Genedrive is required less.

The excitement in Genedrive was triggered by their application for a CE Mark. This is a necessary precondition for being able to sell their rapid covid tests across Europe. So, the market took the application for the mark as evidence that there were going to be substantial sales across Europe. A reasonable enough assumption.

COVID-19 test

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However, that then met three barriers. Or perhaps we all realised that there were three that had to be surmounted. The first is simply what does happen in competitive markets. At least two other London-listed companies (Avacta and Abingdon) made similar announcements. Showing that having a covid test that could be marketed in Europe was not, in fact, a rarity which needed to be cherished. If there are three just in the London market then how many more are there out there?

This was then allied with two political realities. One is that the UK was the only place which did not accept just the CE Mark before government purchases. An actual test of effectiveness at Porton Down was also necessary. Further, it quickly became obvious that most European folk would prefer to order locally made tests rather than those from elsewhere in Europe. The wall of sales therefore never really developed.

Finally, there’s this idea that covid is pretty much over. Oh, sure, there’s going to be grumbling along for years yet. But that all hands to the deck, lockdowns and test everyone and everything, that’s over. Denmark has dropped all restrictions, Sweden never really had them, the end game here in the UK is fast approaching. There simply aren’t going to be government contracts for millions of tests at premium prices any more. Sales prices for those that are ordered are going to be much closer to manufacturing cost. It’s just not as exciting an area as it was.

So, the boom in Genedrive as a result of those covid tests is pretty much over – thus so is the share price at Genedrive back to what it was. The implication of this is that any new boom in the Genedrive price will depend upon some new product, some new news. For the effect of what we already know is now over.

Tim Worstall
Tim Worstall is a freelance writer specialising in economics and the financial markets.