Biostar Pharmaceuticals Inc (NASDAQ:BSPM) was up in the market by more than 60% on no particular news an indication that bulls are in firm control amidst fading short interest pressure. The stock is now trading at highs of $3.39 a share awaiting to see if it will maintain the impressive momentum ahead of the stock’s 52-week high of $6.59 share.
Emerging Risks
The massive gain, however, comes as a surprise, given that the pharmaceutical company is fresh from posting a second-quarter loss of $6.9 million, which should have spooked investors. A second quarter net loss is not the only thing that investors will have to contend with in the short term. A 95.6% decline in net sales to $0.6 million from $13.6 million last year all but arouses serious questions about the company’s prospects.
Biostar net profit is also down by 95% underlining a long road to profitability given the second quarter massive net loss. It is still unclear why the stock is trading at the current levels given the disappointing fundamentals that in most cases should have spooked a good number of investors.
Sale and production of the company’s Aoxing Pharmaceutical products remain suspended further highlight the mess the company finds itself in. Sales could hit new lows with the company remaining uncertain of when it will be allowed to sell the products in question.
Sales Growth Concerns
Casting further doubts in Biostar prospects is the reduction of expenditure on marketing and research & development given that the two are key to triggering sales and growth. In a press release, the company says it is trimming its expenditure in a bid to conserve capital given the current uncertainties.
It comes as a surprise that Biostar Pharmaceuticals Inc (NASDAQ:BSPM) is struggling to achieve any form of sales growth given the target market at its disposal in China. It now waits to be seen for how long the stock will trade at the current highs, given the uncertainties it faces on sales as well as regulatory approval.
