Looking at the weekly chart below, it looks like RAC has broken out of a more than 2 year downtrend that began with the December 2021 peak that coincided with the expanded cardio-protection announcement, completion of the $3 SPP and JC selling 300k shares.
There is also some symmetry in the chart as the breakout has occurred from an extended consolidation (~7 months) between ~$0.75 and $1.10, with the exception of the bear-trap break down into the mid-60 cents. RAC had a similar, though shorter at ~3.5 months long, consolidation in July-October 2020 before a powerful breakout that took us up to the $4.23 record high in March 2021. This consolidation also had a small false bear-trap breakdown to 70 cents prior to eventually breaking out of the top of the range.
If we believe the theory that a longer consolidation results in a more powerful breakout, then this breakout could potentially take RAC to a new all time high, however this will be balanced by facing resistance that has built up over the last 3 years as people who bought higher look to "get their money back" on the way up that was not an issue in the initial rise to ATH. So, unless there is some major news event, I wouldn't be expecting such a smooth ride up this time. I expect the initial target will be around $1.60 as this level has served as support in December/January 2021 and May/June 2022 and resistance in July 2023.
After the initial breakout of the consolidation range to $1.28 last week, I think we were all waiting to see whether the old resistance at $1.10 would now hold as support. We got a very brief retest of that on Monday and RAC has since moved up 18% since then, as well as broken out of the downtrend with that move, so that hopefully indicates that this break out is not a false one and has some legs to it.
I also like that the price action shown on the chart is lining up nicely with the improving fundamental position around RAC in terms of both clinical (imminent delivery of cGMP RC220, upcoming completion of toxicity screening, cardio-protection P1 trial initiation activities, etc. - and throw in a potential positive surprise or two to the mix also) as well as financial - the higher the share price, the more likely option (both $0.75 and piggies) conversions will occur and thereby further improve company financials. So we've mostly done the hard yards of waiting for RC220 and have the upcoming news flow which has the potential to move the share price higher.
For those thinking that RAC has run too far too fast, I've attached a daily chart comparison with IMU below showing the last year of price action. Up until the end of October, RAC and IMU were tracking pretty much in sync, and in-line with overall poor biotech sentiment and many other (though not all) biotech stocks. However, since November last year, IMU has substantially out-performed RAC to be down only 8% over the year. As others have noted, many other biotech stocks have had a similar improvement in performance since November 2023. Up until the last week or so however, RAC has been a laggard and not benefited from that improving sector sentiment, and even after the recent run-up RAC is still down ~35% for the year.
If RAC were to 'catch up' to IMU's performance in terms of performance, that would give an equivalent RAC share price of ~$1.85. At that price, the fully diluted (including piggies) market cap of RAC would be around $350 million dollars, whereas IMU fully diluted are sitting close to a $1 billion dollar MC currently. So I think RAC still has plenty of room to move from there, particularly if upcoming developments and associated news flow is able to drive RAC to significant out-performance.
(20min delay)