Ocugen (NASDAQ:OCGN) stock didn’t move much on a recent announcement that it had applied to the FDA for a new emergency use authorization (EUA) for the Covaxin coronavirus vaccine.

This EUA is for people between the ages of two and 18, but the move is extremely unlikely to prevent OCGN stock from sliding in both the near term and the long term.

The FDA decided not to grant an EUA for Covaxin for adults last June. Moreover, the World Health Organization (WHO) recently declined to approve Covaxin for children. As a result, the chances of the FDA approving Ocugen’s latest EUA are negligible.

Ocugen would receive 45% of any profits from Covaxin generated in the U.S. and Canada. The shot was developed by India’s Bharat Biotech.

A Crazy Week for OCGN Stock

Ocugen’s announcement that it would apply for a new EUA capped a crazy week for the company.

On Monday, Nov. 1 and Tuesday, Nov. 2 OCGN stock soared, and the rally continued on Wednesday morning, persisting for a short time after the WHO announced that it had issued an Emergency Use Listing (EUL) for Covaxin.

But then the shares abruptly started plunging, and the steep downtrend continued on Thursday. It closed down nearly 20% on the week and will open this morning a little above $10.20.

The WHO granted the EUL for Covaxin only for people who are at least 18 years old and did not approve the shot for pregnant women.

The WHO’s chief scientist did say in an interview recently that the agency would look to approve Covaxin for children and pregnant women in much less time than the agency took to approve it for adults. But she added that any approval for children would be data-dependent.

From the time that Bharat Biotech, the maker of Covaxin, expressed its intention to seek approval for the EUL, it took the WHO well over six months to grant the authorization. Therefore, I believe that it will take the WHO at least several months to extend the EUL to children and pregnant women.

 U.S. Children and Covaxin

Children are crucial for Ocugen because, while the FDA authorized vaccines for those over 18 way back in December 2020, it only began approving vaccines for adolescents between the ages of 12 and 15 last May. Only on Oct. 29 did the agency authorize Covid 19 vaccines for those between the ages of 5 and 11.

After the FDA declined to grant an EUA  for Covaxin for adults, it will almost certainly not issue an EUA that would allow children to get the shot. The WHO’s decision to refrain from approving the shot for children doesn’t help Ocugen’s case with the FDA.

The subdued reaction of OCGN stock to the news makes me believe that the Street realizes these points.

Explaining the Gyrations of Ocugen’s Shares

For many years, traders have been automatically buying stocks based on headlines and stories that are deemed by computers to be positive. Additionally, computerized trading systems tend to exacerbate both higher moves and lower moves by stocks.

I believe that, heading into and immediately after the WHO approval, computers pushed up OCGN stock. The computers took that action, I think, based on the news stories in which many sources were quoted as being optimistic about the approval by the WHO and because many retail traders were already pushing up the shares.

As the computers pushed up the stock, additional retail traders became excited and bought more shares. So the retail traders and computers combined to create a powerful cycle that pushed the shares higher.

The smart money likely got in on the trade as well. But after the approval, both the computers and the smart money likely turned against OCGN stock. Specifically, both probably started selling the shares because of the WHO’s exclusions.

The smart money also turned against it because institutions know that the FDA will never approve Covaxin and because Ocugen will likely not have another positive catalyst for at least several months.

Positive Catalysts Are Scarce

In my last column on OCGN stock, I noted that the FDA will require Ocugen to conduct a U.S.-based trial of Covaxin before the agency will even consider approving it.

I estimated that the FDA would not be able to approve the shot until spring 2023.

By now, I believe that most investors have internalized another point I’ve been making for some time: Ocugen cannot possibly generate enough money in Canada to come close to justifying its current stock price.

Meanwhile, all of Ocugen’s own drugs are in the early stages of development and won’t come close to proving their efficacy for years.

Given all of these points, now that the WHO EUL has been granted, Ocugen, in all probability, will not have a meaningful, positive catalyst for at least several months. As a result, the smart money will continue to sell and short the stock for a very long time.

The Bottom Line on OCGN Stock

The FDA is extremely unlikely to grant Ocugen’s latest EUA, and The Street seems to realize that. Moreover, the chances of the shares having any sort of meaningful, positive catalyst for the next several months are extremely low.

Therefore, large institutions and hedge funds are likely to sell and/or short the stock for the foreseeable future. I advise retail investors to do the same.

On the date of publication, Larry Ramer was short OCGN. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Larry Ramer has conducted research and written articles on U.S. stocks for 14 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015.  Among his highly successful, contrarian picks have been GE, solar stocks, Roku, Plug Power and Snap. You can reach him on StockTwits at @larryramer.