T2 Biosystems (NASDAQ: TTOO) stock is either down 65% or up 5,500% dependent upon how we think about it. The distinction necessary here is between real and nominal prices. The one we should think about, the one that affects our wallets, is the real price. So, that’s the 65% down number on TTOO stock. The 5,500% up one is purely nominal and has been done to solve the one specific technical problem. Which it does solve, but clearly the real price shows there’s more to do.

We’ve talked before of T2 Biosystems: “The background here is that Candida Auris has just been identified as a potentially major issue. …..Which is what T2 Biosystems now has: “T2 Biosystems (NASDAQ:TTOO) has received breakthrough device status from the US Food and Drug Administration for its Candida auris molecular diagnostic blood test. The test is designed to detect C. auris, a multi-drug resistant fungal pathogen, in three to five hours, without the need to wait days for a blood culture, T2 Biosystems said.” Breakthrough status makes the process of authorisation much simpler - it’ll happen in something less than geologic time.” Well, that’s good. This also led to a certain meme stock element in the pricing of TTOO stock: “T2 Biosystems stock was up 51% yesterday. TTOO stock is also up another 8% or so this morning. There is no interesting news from the company to explain this. We appear to be simply in meme stock territory.”

Such meme stock valuations do tend to fade over time of course.

T2 Biosystems stock price from Google Finance

What’s affecting the price now is a combination of two things. Firstly, there’s a reverse stock split: “T2 Biosystems, Inc. (TTOO) will effect a one-for-one hundred (1-100) reverse split of its Common Stock. The reverse stock split will become effective on Friday, October 13, 2023.” That doesn’t - or shouldn’t, not directly - affect the market capitalisation. It simply changes the number of shares that make it up. Therefore the nominal share price should react mechanically - 100x up, or 10,000%.

Clearly this isn’t what has happened. The reason for that is that they also announced their results: “Achieved preliminary third quarter 2023 total revenue of $1.5 million, comprised entirely of product revenue, a decrease of 60% compared to the prior year period, primarily due to a $1.0 million reduction in BARDA revenue. Achieved sepsis test panel revenue of $1.1 million, a decrease of 31% compared to the prior year period, primarily due to ending the third quarter with a sepsis test backorder of $380,000.”

They’re selling less and also not managing to deliver what they are able to sell. That’s not, to be polite about it, a good look. So the nominal price has jumped on that reverse stock split. The real price has more than halved on the performance of the business. It’s the second that matters to wallets so it’s the second we should pay attention to.