Should You Buy This Sinking Stock on the Dip?

There are things that can affect and sink the stock prices of companies in most industries. One of them is a short-seller report. Axsome Therapeutics (NASDAQ: AXSM), a mid-cap biotech, was recently the target of one, and it already wasn't having a great year on the stock market. Though it might be tempting for investors sitting on the sidelines to purchase the drugmaker's shares while they are failing to keep pace with the bull market, some might argue that it would be best to take a patient approach.

Let's examine the allegations in the short-seller report more closely and consider whether Axsome's not-so-great performance since the year began presents an opportunity for investors.

The report was from Culper Research, an activist short seller based in New York whose goal is to expose companies that are conning their shareholders and the market by using various shady business or financial practices. That's exactly what it is accusing Axsome Therapeutics of. According to Culper Research, the biotech's revenue in association with Auvelity, a therapy for depression first approved in August of 2022, is inflated. Here's a basic outline of Culper Research's argument:

Continue reading

Source Fool.com