What led to 10X Genomics Inc (NASDAQ: TXG) stock crash

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10X Genomics Inc (NASDAQ: TXG), a life science technology company, stock fell over 7.4% on 12th May, 2020 (as of 9:59 am GMT-4; Source: Google finance) after the company in the first quarter of FY 20 has reported the net loss of $21.1 million for the first quarter of 2020, as compared to a net loss of $3.6 million for the corresponding period prior year. The company has delivered 34% rise in the revenue to $71.9 million for the three months ended March 31, 2020, which represents an increase from $53.6 million for the three months ended March 31, 2019. At the end of March, 2020, the company’s cash and cash equivalents stood at $372.4 million. The company’s cash balance at end of quarter includes the impact of the repayment in full of the term loan borrowings with Silicon Valley Bank of aggregate $31 million. The company has withdrawn its annual revenue guidance for 2020 on the back of the evolving environment and continued uncertainties from the impact of COVID-19. The COVID-19 pandemic is a highly fluid situation and it is not currently possible for then to reasonably project the impact it may have on financial and operating results.

Further, the company had projected revenue for the first quarter of 2020 to be in the range of $71 to $72 million, which represented an increase of 33% at the midpoint over the prior year period. As the pandemic spread from China to countries worldwide, the company has experienced significant reduction in customer activity other than research related to the virus.  Social distancing and stay-at-home orders have temporarily closed many academic and government labs.

Moreover, the company has posted the gross margin of 79% for the first quarter of 2020, as compared to 74% for the corresponding prior year period. The expansion in gross margin was mainly due to lower accrued royalties related to ongoing litigation. The company has incurred the operating expenses of $76.7 million for the first quarter of 2020, which represents a rise of 80% from $42.6 million for the three months ended March 31, 2019, mainly due to rise in expenses related to ongoing litigation, personnel-related expenses and stock-based compensation. The company has incurred the operating loss of $19.9 million for the first quarter of 2020, as compared to $3 million for the corresponding prior year period. This included the $6.7 million of stock-based compensation for the first quarter of 2020, as compared to $1.4 million for the first quarter of 2019.

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