Today's spike in Nanox's share price can be attributed to:
The shares of medical imaging company Nano-X Imaging (NNOX, up 20.65% at 10:50 a.m. ET) saw a surge on Thursday, following significant news about regulatory approval. Initially, the stock was up by 24% earlier in the day, but by 10:50 a.m. ET, it had only increased by 6%.
A significant milestone
In a press release this morning, Nano-X announced that the U.S. Food and Drug Administration (FDA) had expanded the clearance for its leading medical device, the Nanox.ARC. The FDA had previously granted clearance for specific applications, but today, that approval was broadened to encompass pulmonary and intra-abdominal images, among other things.
Nano-X operates on a unique business model that aims at generating recurring, per-scan revenue from its medical imaging software. The strategy involves providing its machines at no cost or at reduced prices. However, to achieve this, the company must comply with FDA regulations. Thus, today's news marks a significant step towards its long-term objectives.
A long journey ahead
Like many emerging medical device stocks, Nano-X's shares can be highly unpredictable. Even minor positive news can trigger significant price increases, but wise investors should keep in mind that the company is yet to become profitable. The company reported a revenue of mere $3 million during the third quarter of 2024 last month.
Investors might consider purchasing Nano-X stock in view of today's news, provided they are prepared for prolonged volatility and the potential for significant losses. While I'm not predicting such outcomes, the company's story is far from complete, making it challenging to forecast the future.
Yet, today's news is positive, and Nano-X shareholders have good reason to be excited.
The expansion of Nano-X's FDA clearance for its Nanox.ARC device, allowing for pulmonary and intra-abdominal images among other things, could potentially attract more investment in the company's finance sector, as financiers might see this as a step towards profitability.
Following the FDA's approval, smart investors might choose to invest in Nano-X shares, recognizing the potential for growth, but also understanding the volatility often associated with medical device stocks and the necessity of preparing for potential losses.
