Most companies go through cyclical downturns from time to time, but these downturns are only temporary if the underlying business model of the company remains sound. However, the downturns in Valeant Pharmaceuticals (VRX), Pandora (P) and Twitter (TWTR) appear to be signs of major identity crises.
Valeant Pharmaceuticals (VRX)
VRX is about the hottest Wall Street controversy you can find today. VRX is currently trading at around $32 per share. But don’t blink or you might miss one of its wild 20%-plus one-day swings. The market seems to have no idea out just what VRX stock is actually worth.
Although nobody seems to know whether or not there is legal wrongdoing at Valeant, the recent political focus on drug pricing has brought to light the vulnerability of VRX’s business model. Rather than relying on research and development for organic growth, the company has a history of buying drugs and then jacking up prices.
“What Valeant does is not simply raise the price but rather it pushes the limits of every vulnerability it can find across the entire U.S. healthcare system,” Citron Research said of VRX back in October.
If this assessment is true VRX could really be the “house of cards” that Morgan Stanley suggested it was way back in 2014. The company will either have to dramatically change its business model or run the risk that the house will eventually fully collapse.
Pandora (P)
Pandora is…
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