GeneDx Holdings Corp. (GeneDx (WGS)) shares are bouncing back on Thursday, climbing about 12% as investors who missed the earlier sell-off decide the genetic testing company might have been punished too harshly.

The stock had taken a beating on May 5, plunging nearly 49% after the company cut its full-year revenue guidance and reported quarterly results that fell short of expectations. But Thursday's rally looks like classic bargain hunting — traders swooping in as the stock hovers near its 52-week low, betting that the sell-off was overdone.

Adding to the positive sentiment: ARK Investment Management disclosed it bought GeneDx shares on May 5, the same day the stock cratered. That vote of confidence from a well-known institutional investor suggests that not everyone is running for the exits.

While the lowered guidance was certainly a gut punch, investors are now focusing on what went right. GeneDx reported 34% year-over-year growth in exome and genome testing volume, and revenue from its core exome and genome business rose 27%. Those numbers tell a story of continued demand for genetic testing services, even if the company's financial execution didn't quite match up.

The Earnings Numbers

Let's get into the nitty-gritty. GeneDx reported a first-quarter adjusted EPS loss of 28 cents, missing analyst estimates of a 1-cent loss. Revenue came in at $102.3 million, up 17% year-over-year but below the $112.96 million analysts were expecting.

The big headline was the guidance cut. The company now expects full-year 2026 revenue of $475 million to $490 million, down from its previous range of $540 million to $555 million and well below the $550.22 million analysts had modeled. GeneDx also lowered its expectations for exome and genome revenue growth to at least 20% (from 33%-35%) and volume growth to at least 30% (from 33%-35%).

Margins and Profitability

Adjusted gross margin held steady at 69%, which is decent. But the bottom line took a hit: adjusted net loss was $8.2 million, compared to adjusted net income of $9.2 million a year earlier. On a GAAP basis, the net loss widened to $63.3 million from $6.5 million, partly due to impairment and debt extinguishment charges.

The company ended the quarter with $171.7 million in cash, cash equivalents, marketable securities, and restricted cash — enough runway to keep operations going.

What the CEO Says

CEO Katherine Stueland struck an optimistic tone despite the miss. "GeneDx delivered 34% year-over-year volume growth in exome and genome testing in the first quarter – a clear signal that there's sustained, strong demand for our services," she said.

She acknowledged the revenue shortfall but emphasized the company's potential: "While our revenue did not reflect the full potential of what this business is capable of, we are adjusting our outlook and are poised to deliver more than 30% volume growth, 70% gross margin, and profitability on an adjusted basis for the year."

Beyond the numbers, GeneDx expanded Medicaid coverage in Texas, Maine, and Arkansas, launched a reflex genome testing product, and announced new research and biopharma partnerships focused on rare disease diagnostics and genomic medicine. These are the kinds of operational wins that don't show up in quarterly revenue right away but could drive long-term growth.

Short Interest

Short interest in GeneDx ticked up slightly to 3.96 million shares from 3.94 million, representing about 26.61% of the public float. At current trading volumes, it would take short sellers about 6.13 days to cover their positions. That's a fairly high short interest, which could add fuel to any rally — if the stock starts moving up, short sellers may be forced to buy shares to cover their bets, creating a short squeeze.

Technical Picture

Now for the sobering part. The bigger-picture trend is still bearish. WGS is trading 36.8% below its 20-day simple moving average (SMA), 42.9% below its 50-day SMA, 56.5% below its 100-day SMA, and 63.6% below its 200-day SMA. Those are big gaps, and when you add in the death cross that formed in February (the 50-day SMA crossed below the 200-day SMA), the longer-term chart remains in "downtrend until proven otherwise" territory.

Momentum is the clearest tell right now. The relative strength index (RSI) is at 24.26 — deeply oversold. Readings below 30 often coincide with short-term bounces, even when the primary trend remains down. So Thursday's rally fits the pattern of a snapback rather than a confirmed trend reversal.

From a structural standpoint, the stock is trying to stabilize after hitting a 52-week low in May, but it's still well below the March swing zones that typically act as overhead supply on rebounds. With the 12-month performance down 31.25% and price far below key moving averages, bulls generally need to see follow-through that reclaims at least the short-term averages before the rally looks durable.

• Key Resistance: $60.71 — near the 20-day EMA, a common "first test" level in oversold rebounds
• Key Support: $32.21 — the 52-week low zone from May, the nearest major downside reference

WGS Price Action: GeneDx Holdings shares were up 12.23% at $38.95 at the time of publication on Thursday. The stock is near its 52-week low of $32.21.