TTOO stock price is pumping: Is T2 Biosystems a good buy?

T2 Biosystems (NASDAQ: TTOO) stock has woken up recently even as concerns about the company remain. The shares soared to a high of $0.4453 last week, the highest level since April. In all, the penny stock has jumped by more than 600% from the lowest level this year, giving it a market cap of over $110 million.

Next GameStop?

T2 Biosystems stock price surge accelerated after the company published mixed financial results last week. The company said that its revenue plunged by 67% in Q2 to just $2 million. This decline was mostly because of a drop in BARDA research contribution that happened during the Covid-19 pandemic. 

Its net loss dropped to $6.3 million in Q2 from the $18 million it made in the same quarter in 2022. Also, its cash and equivalents came in at $16.1 million, helped by an investor who converted a $10 million loan into equity. T2 Biosystems expects that its revenue for this year will be between $9.5 million and $10.5 million. 

I believe that T2 Bioststems stock price rally will not last considering that the company will likely use the rebound to sell additional shares in a bid to boost its balance sheet. While this is a prudent move, it will lead to dilution among existing shareholders. 

Another challenge is that the company has yet to figure out how to market its rapid diagnostic products in a profitable manner. Besides, while the number of Covid-19 cases is rising, most people have stopped caring about the disease. 

T2 Biosystems stock outlook

The daily chart shows that the TTOO stock price has made a strong recovery in the past few weeks. It has risen and retested the important resistance level at $0.4487 ahead of the upcoming reverse split. The shares have moved above the 25-day and 50-day moving averages.

Therefore, I believe that the T2 Biosystems share price will remain under pressure in the coming months. If this happens, the stock will likely resume the bearish trend and retest the key support at $0.20.