Is this the case of Titan Medical Inc. stock (CVE:TMD), (OINK:TITXF)? It might be. Yesterday, unexpectedly and out of nowhere, the shares slumped heavily on the TSX Venture Exchange (CVE). TMD dropped 19% down to $0.90 in the end of the session.
What made the decline of the shares even worse was the huge for the company turnover beating five times the average. During the day, TMD decayed to $0.80, a low for the last five months.
The bad story does not end here. The stock has been on the downfall since early December. Over that time, the shares have lost 58% from their value. In January and February, the fall continued but at a slower pace. Suddenly, yesterday the slump accelerated.
It is hard to find a reasonable explanation for the behavior of the stock. No important news have been issued by Titan recently. The latest official announcements were from late February – these were the financial statements for 2010.
They looked, however, much more positive than negative. The company reported:
- A stable cash position of $9.6M in the end of 2010 versus $3.2M one year before that;
- No long-term debt and a working capital surplus of over $9M;
- A net loss of $3.7M for the past year.
In addition, in early February Titan granted a total of 160K incentive stock options, each at a price of $1.27, to various directors and officers.
This relatively stable financial condition of the company gives hope to managers that the shares have potential for a rise in the future.
On the other hand, it seems Titan has been overvalued by investors on the market. The current market cap is $45M, while the net tangible worth of the company is no more than $9.23M.
From a technical point of view, TMD is in the oversold area, suggesting a possible progress of the shares. However, this is not highly reliable without a confirmation.
