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Quest Diagnostics Inc(DGX-N)

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Why Bionano Genomics Stock Tanked Today

Motley Fool - Mon Aug 14, 2023

What happened

A big change in the C-suite was behind the steep fall in Bionano Genomics' (NASDAQ: BNGO) share price on Monday. Following the biotech's announcement that its CFO is stepping down, investors traded out of the stock to the point where it closed the day more than 13% lower. So its fortunes diverged sharply from those of the S&P 500 index, which rose by almost 6%.

So what

As the work week kicked off, Bionano announced that its current CFO, Christopher Stewart, would soon depart the company. Effective on Sept. 11, he will be replaced by Gülsen Kama. Stewart will stay on during the transition for an unspecified period of time before moving into an advisory role at the specialty healthcare company.

Bionano did not provide any reasons for Stewart's departure.

Incoming CFO Kama has served in the same position previously at other companies, most recently at tech solutions provider Northern Data. Prior to that, she was CFO of the east region and healthcare IT at Quest Diagnostics. She also did stints as a finance executive at such businesses as Jackson Hewitt Tax Service and insurance company American International Group.

Now what

Kama appears to be eminently qualified for her new job, and the transition from the current to the future CEO seems to be going smoothly. However, when C-suite departures closely follow negative financial news from a company, they can make investors more bearish in a hurry.

Earlier this month, Bionano reported its second-quarter results, and the company showed an encouraging year-over-year rise in revenue but a deepening net loss that came in at over $38 million. More alarmingly, it effected a 1-for-10 reverse stock split. This is a financial engineering move typically seen as an attempt by a faltering company to boost its share price.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Quest Diagnostics. The Motley Fool has a disclosure policy.

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