Pacific Biosciences: What happens with this penny stock?

The Ark Invest founder and CEO has been loading up on this biosciences innovator.

Cathie Wood, the founder and CEO of Ark Invest, has made some notable moves into a penny stock, Pacific Biosciences (NASDAQ: PACB) in recent weeks.

Since October 28, Wood has purchased about 2.1 million shares of Pacific Biosciences since October 28 for her flagship Ark Innovation ETF (ARKK). Overall, ARKK owns about 21 million shares of Pacific Biosciences at a total value of around $37 million, or 0.48% of the fund.

Wood bought another 34,000 shares on November 6 in the small biosciences stock for her Ark Genomic Revolution ETF (ARKG). The Ark Genomic Revolution ETF owns about 11 million shares of Pacific Biosciences stock valued at roughly $19 million. PACB is the 20th largest holding in this ETF, representing about 1.64%.

Pacific Biosciences stock is trading at just $1.83 per share, which puts it in penny stock territory. The stock is up less than 1% year-to-date and is down 25% over the past year.

Over the past five years, PACB stock has had an average annualized return of -34% per year. It peaked at around $51 per share in February of 2021, riding high in the tech boom of that year. The crash that followed sent PACB plummeting and it never recovered, as it was hammered by high interest rates and no earnings.

Ark likes its disruptive technology

Wood and Ark have long been fans of the company, despite its lack of earnings. Pac Bio, as it is called, specializes in advanced gene sequencing, or more specifically, long read sequencing, also known as HiFi sequencing. Long read sequencing can read long strands of DNA or RNA fragments ranging in size from 1,000 to 20,000 bases or more. For context, most short-read sequencing technologies use fragments that are 50 to 300 bases long.

Why is this important? It provides a more complete map of the genome, whereas the previous short-read technologies just read the strands in smaller snippets. A longer more complete read will give scientists a better view of complex genetic variations that are often missed by short read technologies. Ultimately, it represents the next wave of genetic medicine and will help cure and manage diseases.

Pacific Biosciences is one of the pioneers in this space and . Long read sequencing is being used now, but it is still in its infancy and is scratching the surface of its potential. Wood and Ark Invest are betting on this company to hit it big.

Investors should know that the company is not profitable, as it reported a net loss of $38 million in the last quarter. That is improved from a $60 million loss in the same quarter a year ago.

Pacific Biosciences stock is very speculative at this point due to its lack of earnings, so investors should be cautious. But at such a low entry price, it is a tempting play, based on its massive breakthrough potential. But as with any unprofitable penny stock, investors should be cautious and take relatively small positions. As always, never invest more than you are willing to lose.