NVOS stock price is surging but Novo Integrated is still risky

Novo Integrated Sciences (NASDAQ: NVOS) stock price surged by more than 86% in the pre-market session to a high of $0.38, the highest level since September 18th. It has surged by more than 92% from the lowest level this month, giving it a market cap of over $31 million. 

Why is NVOS shares surging?

Novo Integrated Sciences is a company that provides solutions like healthcare, medical technology, Research and development (R&D) in oncology research, diagnostics, and therapeutics, and manufacturing.It does this through key pillars, including service networks, technology, and products.

The company has made several important headlines this month. It initially said that it is considering launching a share repurchase program worth over $5 million. The share buybacks would happen either if the company managed to raise additional funds. I always take share repurchases by loss-making companies with a grain of salt.

In another report on Thursday, the company signed a $1 billion Master Collateral Transfer Agreement with the Blacksheep Trust. The $1 billion collateral transfer is expected to occur in one or more transactions in the current quarter after validation and authentication. In a statement, Novo’s CEO said:

“Novo has secured its core business capital needs with previously disclosed financings and financing opportunities. We believe the pending monetization of this One Billion Dollar collateral transfer transaction represents the solution to the Company’s hypergrowth expectations.”

The most recent results showed that Novo Integrated Sciences had over $3.2 million in revenues in Q2, down by 76% from the same quarter in 2022. This crash happened because of the decrease in outsourced product sales and IoNovo Iodine. Its operating costs dropped to  $2.7 million while the net loss was $1.47 million.

Novo Integrated Sciences stock analysis

The daily chart shows that the NVOS stock price has been quite volatile this month. Before that, the penny stock remained in a tight range between $0.2131 and $0.1053. Now, the shares have bounced back to a high of $0.3635, the highest point since September 15th. It remains below the important resistance level at $0.5394.

Therefore, I suspect that buyers will attempt to retest the highest point this month. If this happens, it means that it could rise by another 47%. However, for long-term investors, I believe that buying and holding this stock is an extremely risky move since there is a room to retest this month’s low of $0.10.

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