The Incannex share price has plunged 70% so far in 2022. What's gone so wrong?

Downside continues over the past month for the cannabis stock.

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Key points

  • Incannex shares have caught a bid today after bouncing from 52-week lows 
  • Shares are beaten down and continue to sell off despite the broad healthcare sector strengthening since June 
  • The Incannex share price is down more than 18% in the past 12 months 

The Incannex Healthcare Ltd (ASX: IHL) share price has bounced from 52-week lows today and now trades in the green.

At the time of writing, the share is swapping hands more than 5% higher at 20 cents apiece on no news.

What's up with the Incannex share price?

The share has been on a one-way slope downwards from its 52-week highs of 73 cents in March. More recently, it extended gains throughout July before bottoming at its yearly lows in yesterday's session.

Sellers have been the dominant force all the way down as well, judging by the appearance of the chart below. Note the downward bias since June, where buyers have been absent.

Losses have now extended to 68% this year to date for the Incannex share price.

This is in stark contrast to the S&P/ASX 200 Health Care Index (ASX: XHJ). It has turned course and trades at a premium to most other benchmarks.

The index (representing the broad health care sector) has shot up since June, creating a divergence between it and the Incannex share price, as seen below.

TradingView Chart

As such, the share is adding to losses whilst the healthcare sector is strengthening, suggesting that investors might be looking to for exposure to other factors – such as profitability – in H1 FY23.

This would make sense with the prospects of 'sticky' inflation, economic slowdown and interest rate hikes looming on the horizon, because only those companies with the most defensible business models will prosper in that climate.

Meanwhile, the Incannex share price is down more than 18% in the past 12 months.

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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