Though manageable through modern medical technologies, diabetes is nevertheless a pain in the rear. On a frequent basis, patients need to prick their fingertips to check their blood sugar levels. However, the advent of continuous glucose monitoring (CGM) systems, such as the Eversense device created by Senseonics (NYSEAMERICAN:SENS), brings much-wanted convenience for patients. It’s no wonder that social media gravitated toward SENS stock.

To give a brief background, Senseonics’ Eversense systems comes in two lifespan models — a 90-day and a 180-day version. The Food and Drug Administration approved the former in June 2018, which is a CGM that’s inserted under the skin. From there, patients can monitor their critical health metrics via a smartphone app.

Among the meme stocks out there, SENS stock is one of the more sensible. And while I know much debate rages regarding the definition of a meme trade, I’m referring to Morningstar’s guidance on the topic, which states that they are equity units “that see dramatic price increases, mostly fuelled [sic] by people on social media.”

From that explanation, SENS stock appears to qualify. Sure, I realize that this isn’t a satisfactory definition and criticism will continue pouring in. But for this article, I want to focus on whether or not it’s a worthwhile opportunity at current levels.

SENS Stock Potentially Tied to a New Care Paradigm

What initially throws some people off from SENS stock is that shares used to trade well below a dollar up until earlier this year. But the reason for the upswing is that Senseonics may change the paradigm of diabetes care and management.

• One-off obstacle: As I mentioned above, the FDA already approved the 90-day Eversense system. And the regulatory body was scheduled to review the 180-day version. However, the Covid-19 crisis occurred, disrupting everything. Not only that, the FDA warned that it suffers from big administrative backlogs, which initially hurt SENS stock. But the hope is that once this one-off, (hopefully) non-recurring challenge is cleared, SENS will take off.
• Medical advantages: Also mentioned above is that diabetes imposes daily challenges to patients. But with CGM systems, people with the condition can enjoy much greater freedoms, which dramatically improves mental health while protecting physical health. As well, Eversense features unique advantages, such as on-body vibration alerts to critical situations. That’s a first for a CGM system.
• Short squeeze ‘em: Despite the anger people have regarding the definition of meme stocks, you can’t help but notice that SENS stock carries hallmark characteristics of the label, particularly the short squeeze intent. As of June 15, the short percentage of float is nearly 20%, which is very high. This dynamic sets up the real possibility of a short squeeze, which would be profitable for the bulls.

Senseonics Is Not Without Its Risks

Admittedly, SENS stock is an enticing proposition because it combines two compelling factors: a fundamentally strong, relevant business and extremely bullish furor. But there’s also something to be said about putting too much money into an obvious trade. Additionally, here are three other cons to consider.

• Finger pricks still necessary: This headwind caught me by surprise and it’s something that proponents should consider before buying SENS stock. According to Diatribe.org, while Eversense is very accurate, it does require “two fingerstick calibrations per day.” To me, that seems to take away a key advantage of going the under-the-skin CGM route.
• Competition: On a similar note, the competition can potentially steal market share from Senseonics. It’s not about replacing Eversense altogether but rather, marketing attributes that Eversense lacks. For instance, FreeStyle Libre, a CGM system by Abbott Laboratories (NYSE:ABT), does not require fingerstick calibrations. Also, FreeStyle is approved for dosing insulin (except for certain cases), a clear advantage over Eversense.
• Over-squeeze problem: While the short percentage of float is near 20%, the short ratio is only 1.63. That means short traders can cover their positions in less than two days based on average trading volume. Keep in mind that I’m no expert in short-squeeze tactics but it seems you should have the short ratio in your favor if you want to trap the bears. That’s not quite the case for SENS stock.

Trade at Your Own Discretion

Seemingly, what angers people more than mislabeling a meme stock is providing an analysis without an opinion one way or the other. With such intense popularity for SENS stock, I’m fine with just leaving this article as is. But, you got to give the audience what they want so here goes.

Perhaps to no one’s surprise, I’m going to stay on the sidelines. Personally, I believe there’s too much speculation built into SENS stock. Also, the underlying company’s Eversense product doesn’t have a knockout punch. Instead, it offers some advantages, such as on-body vibration alerts, while having some disadvantages, like daily fingerstick calibrations.

Ultimately, this is your money and your decision. Perform your due diligence and trade carefully.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.