Problems at Fulgent Genetics (FLGT)

Problems at Fulgent Genetics (FLGT)

Fulgent Genetics (NASDAQ: FLGT — $1.62 billion) has rallied around 400% since March as the company has successfully pivoted to creating coronavirus test kits. The market is giving the company an excessive ~$1.3 billion valuation boost on what will be around a ~$550 million one-time benefit from the pandemic. In addition, a series of related party transactions raise concerns about whether the company is being run in the best interest of shareholders.

Prior to the coronavirus pandemic, Fulgent was a sleepy genetic testing company with around $25 million in annual revenue. The company has perfectly executed on growing coronavirus testing and currently has the capacity to do around 60,000 tests per day.

Fulgent recently announced partnerships with the New York City Department of Education, the Pac-12, and the Ohio Department of Corrections to provide coronavirus testing. On November 23, 2020, the company boosted full-year guidance to “at least $300 million in revenue for the full year 202…