Why Shares of Invitae Dropped 13% on Tuesday

What happened

Shares of Invitae (NVTA 106.67%), a maker of medical genetic tests, fell 14% on Tuesday. The stock closed at $4.00 on Monday, then opened on Tuesday at $3.70, before falling to a daily low of $3.45 around 11 a.m., then rising to $3.48 at Tuesday's close.

The stock is down more than 77% this year and has a 52-week low of $1.83 and a 52-week high of $32.93. Invitae's shares have been highly volatile and, earlier this month, shot up 277% the day it released second-quarter earnings. The company has been popular with retail investors and has occasionally shot up due to short squeezes, only to fall back again.

So what

The drop comes a day after the company announced a collaboration with international research program Simons Searchlight. The deal connects data culled by Invitae's Citizen patient medical records with outcomes and biospecimens from Simons Searchlight. The point is to build a better dataset that will help researchers to treat rare neurodevelopmental diseases. The news buoyed the stock, pushing it to $4.00 for the first time since Aug. 18. Investors gladly sold on the news a day later, especially on a day when the market was down in general.

It's interesting to note that Invitae CEO Ken Knight reiterated Tuesday that the company is continuing to look at cost-cutting ways to get the company back to being cash-flow positive, which was a big topic in the company's second-quarter report. That may take a while as the company has been hemorrhaging money for quite some time.

Now what

There's plenty to be concerned about with this biotech stock, as evidenced by its second-quarter report. It listed $313 million in cash, 67% less than it was just six months ago. Through six months, the company said it lost $11.75 in earnings per share (EPS), compared to positive EPS of $0.17 a year ago. On the other hand, the company reported $260 million in revenue through six months, up 18% year over year. The company started its cost-cutting mantra in July, so it may take a while for a turnaround to show, if it ever does.