Growth stocks took off during 2020 amid the early stages of the pandemic. Buying during that time led to significant profits for some investors. One of the stocks that benefited from that bullishness was CRISPR Therapeutics (CRSP -4.50%), a Cathie Wood favorite. The gene-editing company has enormous potential and can help transform the healthcare industry.
But now that the hype has cooled and growth stocks are struggling, how much would a $10,000 investment in CRISPR back in 2020 be worth today? Below, I'll look at that, along with whether the stock is a good buy right now.
CRISPR's stock price has gone full circle
On March 2, 2020, CRISPR's stock opened at a price of $54. By January 2021, amid the meme stock hype, shares of CRISPR reached highs of more than $200, and the stock was looking like a fantastic buy. However, CRISPR, along with other growth stocks, has gone on to crash since then, and today it's trading at less than $50.
The stock has gone full circle within a span of three years. If you had invested $10,000 into the business three years ago, you would have owned approximately 185 shares of the company. Based on Monday's closing price of $49.33, that investment would now be worth $9,126, for a decline of 9%.
Not a lot has changed in three years
Three years ago, the company didn't have an approved product, and its top line was primarily due to the collaboration revenue it earned from working with Vertex Pharmaceuticals.
Today, the company still doesn't have an approved product, but that could change as CRISPR and Vertex are in the process of submitting a Biologics Licensing Application to regulators on their CRISPR/Cas9 gene-editing therapy, exa-cel, which is a functional cure for sickle cell disease and beta-thalassemia.
CRISPR said in its earnings release last month that the rolling submission should be complete by the end of the first quarter -- which would be sometime this month. So there could be hope that it may not be too much longer before a decision is made on the treatment, which could lead to some more stable revenue growth for the business, and perhaps a more consistent performance from the stock as well.
What's interesting to note is that despite CRISPR's stock becoming more popular and well-known as it progresses through its clinical trials, the stock's average trading volume is nearly unchanged from where it was three years ago.
CRSP 30-Day Average Daily Volume data by YCharts.
Things appear to be more stable now, but the risk for investors is that this can be a highly volatile stock, and that means there's the potential for both big gains and losses.
Is CRISPR a buy today?
If exa-cel obtains approval from the Food and Drug Administration, there could again be significant volatility for this healthcare stock. It would be a monumental achievement for CRISPR as the company notes that "exa-cel has the potential to be the first approved CRISPR-based therapy in the world."
The danger is that if it doesn't obtain approval, the stock will surely tank. This is where CRISPR can be a high-risk, high-reward type of investment. And if you aren't prepared for the volatility and wild fluctuations in price that can be involved with owning the stock, you're better off staying away.
If, however, you're comfortable with the level of risk, then this could be a good buy. CRISPR does, after all, have a strong balance sheet with more than $1.8 billion in cash and marketable securities on its books as of the end of last year. That adds a layer of safety for investors as the company used up $495.7 million over the course of its day-to-day operations in 2022.
As long as the cash burn doesn't get worse, the business should be well-funded for multiple years.
