10 Worst ARK Stocks To Buy According To Short Sellers

5. Recursion Pharmaceuticals, Inc. (NASDAQ:RXRX)

Short Interest as % of  Shares Outstanding: 19.18%

Number of Hedge Fund Investors In Q2 2024: 24

Ark Invest’s Q2 2024 Stake: $211 million

Recursion Pharmaceuticals, Inc. (NASDAQ:RXRX) is a mid sized biotechnology company that is in pre commercial stages. It is developing treatments for spinal and brain ailments and tumors, gastrointestinal diseases, ovarian cancer, and other cancers. Since it is a pre commercial company, Recursion Pharmaceuticals, Inc. (NASDAQ:RXRX)’s hypothesis depends on its ability to successfully navigate through clinical trials and meet all endpoints in the readouts. Since it is heavily investing in its pipeline, the firm is yet to turn a positive operating income. Apart from its medicines under development, the firm also provides its operating system for healthcare companies. This allows them to run complex drug discovery processes using large language models, and it is also responsible for NVIDIA’s $50 million investment in Recursion Pharmaceuticals, Inc. (NASDAQ:RXRX) last year. The software introduces somewhat of SaaS-esque trends into the firm’s hypothesis and opens the door to recurring revenue as it signs up large customers like Bayer. Recursion Pharmaceuticals, Inc. (NASDAQ:RXRX) also has ten trial readouts due in the next 18 months, leaving the field open for bearish or bullish outcomes.

Recursion Pharmaceuticals, Inc. (NASDAQ:RXRX) has also partnered with AI drug discovery firm Exscientia, and here’s what management had to say about the affair during the Q2 2024 earnings call:

“And I think this deal, in many ways, will make Recursion perhaps a partner of choice for others in the industry. Finally, our platform. Our platforms at Recursion really focused on exploration of biology, hit discovery, target discovery. We’ve been building that for over a decade, and our colleagues at Exscientia have really been building for about the same amount of time this incredible precision chemistry platform. The ability to go from a hit to a development candidate with active learning and automated synthesis, is really, really exciting to us and putting these two platforms together, we think, is going to put us on the cutting edge. And finally, when we combine these businesses, we believe that we will have not only the team, the tools and the technology to go to the distance, but we’ll also have the resources to do that.

At the end of Q2, the companies combined have roughly $850 million, which we believe, with the right kind of operational synergies, puts us on a runway into 2027.”