GeneDx Shares Plummet 13% Amidst Strong Earnings: What's Fueling the Selloff?

Summary
• GeneDx (WGS) plunges 13.2% intraday to $117.5, its lowest since 2024
• 52-week range of $55.17–$170.87 highlights extreme volatility
• Company reports 41% revenue growth in 2025, raises 2026 guidance to $540–555M
• Options chain shows 532 contracts traded on the $115 put ahead of Friday expiration
GeneDx’s stock is in freefall despite reporting record revenue growth and raising 2026 guidance. The $117.5 price—down from $130 at open—has triggered panic selling, with volume surging to 1.34M shares. This sharp reversal comes as the company announces a $172M cash position and strategic partnerships, yet the market is pricing in existential risks. The key question: Is this a buying opportunity or a warning sign?

Strong Earnings Can't Stem Share Sell-Off
The selloff defies GeneDx’s stellar fundamentals. While the company reported 54% exome/genome revenue growth and 30.5% test volume expansion, the market is pricing in skepticism about its 2026 guidance. The $117.5 price has broken below critical support levels (135.79–136.57 30D support) and the 200D MA of $109.02. Options data reveals 532 contracts traded on the $115 put (WGS20260116P115), with 208,823 turnover and 101.14% implied volatility—suggesting institutional hedging against further declines. The bearish engulfing candlestick pattern and MACD crossover below signal line (-3.13 vs -3.22) confirm technical bearishness. Despite $172M in cash and 71% adjusted gross margins, the market is discounting execution risks in scaling genomic testing.

Options Playbook: Puts for Protection, Calls for Bets
• 200D MA: $109.02 (below current price)
• RSI: 48.49 (neutral)
• MACD: -3.13 (bearish)
• Bollinger Bands: $122.97–$152.40 (current price at lower band)
• Key Resistance: 135.79–136.57 (30D support now acting as overhead supply)
• Key Support: 127.50–129.72 (200D range)
• Sector Leader LH: -0.86% (muted sector impact)

Top Options:
• WGS20260116P115
- Put contract with 101.14% IV (high volatility)
- Delta: -0.4289 (moderate sensitivity)
- Theta: -0.0847 (slow time decay)
- Gamma: 0.0284 (moderate sensitivity to price swings)
- Turnover: 208,823 (high liquidity)
- Leverage: 24.91% (moderate gearing)
- Payoff: At 5% downside ($111.63), intrinsic value = $3.87 per share
- Why: High IV and liquidity make this ideal for volatility plays

• WGS20260116P114
- Put contract with 110.25% IV (extreme volatility)
- Delta: -0.4042 (moderate sensitivity)
- Theta: -0.1495 (rapid time decay)
- Gamma: 0.0258 (moderate sensitivity)
- Turnover: 940 (reasonable liquidity)
- Leverage: 24.80% (moderate gearing)
- Payoff: At 5% downside ($111.63), intrinsic value = $2.77 per share
- Why: Aggressive play for sharp declines with high IV premium

Action: Aggressive bears should consider WGS20260116P115 into a breakdown below $122.97 (lower Bollinger Band). Conservative bulls may short the $115 put if $127.50 support holds. Watch for volume spikes on the $113 call (WGS20260116C113) as a potential short-term reversal signal.

Backtest GeneDx Holdings Stock Performance
The backtest of the WGS performance after a -13% intraday plunge from 2022 to the present reveals positive short-to-medium-term gains. The 3-Day win rate is 54.17%, the 10-Day win rate is 56.51%, and the 30-Day win rate is 59.64%, indicating a higher probability of positive returns in the immediate aftermath of the plunge. The maximum return during the backtest period was 27.71% over 30 days, suggesting that while there was some volatility, the fund was able to recover and even exceed its pre-plunge levels.

Act Now: Key Levels and Options to Watch
The selloff is likely to persist until GeneDx breaks above $135.79 (30D support) or below $122.97 (lower Bollinger Band). Immediate focus should be on the $127.50–$129.72 200D support range and the $135.79–$136.57 overhead supply. Options traders should prioritize the $115 put (WGS20260116P115) for volatility plays, while cash investors should wait for a close above $130 to confirm a reversal. Sector leader Labcorp (LH) is down -0.86%, suggesting broader healthcare sector caution. Watch for $122.97 breakdown or regulatory reaction.