Ginkgo Bioworks Holdings, Inc. (DNA) has been beaten recently because of too much sales pressure. The stock has lost 52.3% in the past four weeks, but at the end of the tunnel it is now on the territory for sale, with Wall Street analysts hoping to report better revenues than previously predicted.
To find out if inventory is not sold, we use the Relative Strength Index (RSI), one of the most commonly used technical indicators. This is a momentum oscillator that measures the speed and variation of price movement.
The RSI vibrates between zero and 100. Typically, if the RSI reading falls below 30, inventory is considered to be oversold.
Technically, all stocks vibrate between being over-acquired and over-selling, regardless of the quality of their foundations. And the beauty of RSI is that it helps you quickly and easily check if the stock price is reaching a point of reversal.
Therefore, this measure may lead investors to start looking for opportunities to enter the stock to benefit from the inevitable rebound if the stock falls too below fair value due to unfair sales pressure.
However, like all investment tools, RSIs have limitations and should not be used alone to make investment decisions.
The massive sale of DNA strains appears to be in the process of exhausting itself, as shown by the RSI read of 29.9. Therefore, stock trends could quickly reverse to reach the old equilibrium of supply and demand.
RSI values are not the only factor that indicates a potential turnaround for a stock in the short term. On the basics, there was a strong agreement among sell-side analysts covering stocks when raising revenue estimates this year. Over the past 30 days, consensus EPS estimates for DNA have increased by 15.5%. Additionally, an upward trend in revenue estimates usually leads to price increases in the short term.
Furthermore, DNA currently has Zacks rank #2 (purchase). This means that it is in the top 20% of over 4,000 shares ranked based on estimated earnings revisions and surprising trends in EPS. This is a more critical indication of potential turnarounds for short-term inventory. A complete list of today’s Zacks Rank #1 (Strong Purchase) stocks here >>>>
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Ginkgo Bioworks Holdings, Inc. (DNA): Free Stock Analysis Report
