The remarkable Femasys (NASDAQ: FEMY) stock price comeback continued on Monday as demand for the shares continued. The shares surged by more than 45% on Friday and gained by another 15% in the pre-market session. It has soared by over 1,257% from the lowest level in September, giving it a market cap of nearly $50 million.

Femasys shares have surged after the company made several important news in the past few weeks. In August, the company obtained a license to sell its female reproductive products like FemVue, FemCath, FemCerv, and FemaSeed in Canada, a key market.

The most recent news, which I wrote about here, was that the Food and Drug Administration (FDA) cleared FemaSeed, a new drug for treating fertility challenges. The intratubal artificial insemination product is different from other solutions in that it delivers sperms directly to the fallopian tube.

Therefore, the Femasys stock price has surged because investors anticipate the company to start making more money in the coming years. For one, it is addressing an industry with a large total addressable market. A recent report estimated that the fertility industry will be worth over $46 billion by 2030, representing a 6% CAGR growth rate.

FEMY chart by TradingView

Now, the question is whether Femasys stock price has more upside after surging by more than 1,250% from the year-to-date (YTD) low. I believe that more gains could be limited as some initial buyers start taking profits.

Another potential risk to FEMY stock is that the company could decide to use the stock surge to raise additional capital to fund its operations. It recently raised $3.9 million in a direct offering in a bid to boost its balance sheet and fund its working capital. 

While Femasys believes that it has enough cash to run through Q2 of 2024, the management could decide to raise cash now that the shares have surged. While this is a dilutive move, I believe it is a good measure now that interest rates are rising. 

Further, stocks don’t go up forever. In most cases, huge gains are usually followed by a major dip. We saw this during the meme coin mania in 2021 when stocks like GameStop, Clover Health, and ContextLogic surged. After seeing a major surge, these stocks pulled back sharply after that, with Bed Bath & Beyond filing for bankruptcy.

Therefore, there is a possibility that the Femasys stock price will nosedive in the coming weeks. If this happens, the shares will retreat to the key support at $1.50.

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