Over the last couple of weeks, I have received multiple requests for comment on a small speculative radiology software stock called 4D Medical (ASX: 4DX), in part because it announced on July 31, 2025 that a stock I own shares in, Pro Medicus (ASX: PME), had lent 4D Medical $10m.
In part because of the positive attention garnered through this support, the 4D Medical share price has enjoyed an extremely strong run from around 25 cents prior to the announcement to a high of $2.38 on September 8. It has since moderated slightly to $1.63. That equates to a (fully diluted) market capitalisation of around $900m, or approximately 150 times FY 2025 Operating Revenue of $5.9m. In FY 2025 4D Medical made a loss of about $30m which is approximately 5 times its operating revenue.
You can see how initially the stock had a measured response to the news of a $10m replenishment to the balance sheet, but the volume has really picked up in September, ever since the company announced a handful of new customer wins. At the same time, the CEO Andreas Fouras also gave an enthusiastic investor presentation, where he emphasised the quality of the products 4D Medical sells. For example, he commented, “We’ve never had a pilot that hasn’t turned into a paying customer.”
Now, as it happens, I previously had a small research position in 4D Medical, because I noticed that, while my default assumption is that low-revenue stocks will stay that way, at least it seems to have an externally validated product.
However, as time went on 4D Medical proved to be an epic spender of cash, and I eventually sold my shares for a loss of around $350. Lesson learnt, or so I thought at the time.
Little did I know that the investment by Pro Medicus into this loss-making minnow would prove to start an epic cycle that would see the 4D Medical stock price increase by more than 500% in less than 2 months.
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Has The 4D Medical (ASX: 4DX) Stock Hype Peaked?
The short interest in 4DX is very low according to shortman and this is likely because there is a lack of shares available to short making it expensive to do so. A lack of borrow to facilitate short selling often helps sustain share price hype cycles because it means there is either no way to bet against the stock, or it is very expensive to do so.
With virtually no short sellers, few if any market participants have a financial incentive to point out the 4DX share price is overhyped. If the 4DX share price is sustained at current levels, then eventually more stock will become available to short. But this could take months.
Speaking sociologically, 4D Medical has become favoured by investors and advisers alike (since the share price started increasing). Recently, the internet has been awash with (both licensed and unlicensed) positive opinions about the stock. However, I am starting to see some evidence that might be reducing.
For example, here you can see one speculative stock “investor” tweeted on August 29 that she had bought more 4DX shares.
When I checked on September 4, she had made six more tweets about 4D Medical shares, bringing the total to seven tweets from August 29 to September 4. She also reposted three tweets by other people about 4D Medical during that period, for a total of seven tweets and three re-posts in eight days by my count. I’ll put the screenshots below.
However, when I checked the 8020invest twitter account today, I could only see three tweets about 4DX and zero of the reposts. This observation is consistent with the supposition that 8020invest has un-reposted three reposts about 4DX that she made between August 29 and September 4, and also deleted four tweets she wrote about 4DX, but I remind readers that there could be some other reason the tweets disappeared (eg the twitter account might have been hacked and had tweets selectively deleted).
Whatever the explanation, I can be certain that a number of positive publications about the stock from that account have disappeared in the days since September 4.
I want to emphasise here that none of the accounts that she re-posted have deleted the tweets, and that “The Stock Network” and “The Wealth Hustle” both cover a range of stocks and were not tweeting exclusively on 4D Medical, but rather making passing comments on a range of stocks, as is their normal habit.
I also want to clarify I do not know when or if the 8020Invest account owner sold the 4DX shares that she bought and am certainly not suggesting she has traded the shares at any particular time. My only observation is that positive publications that previously appeared on the 8020invests twitter account are no longer observable.
However, I do think that logically, if her past tweets about 4DX are disappearing, then she is unlikely to tweet about the stock in the near future in the same excited way that she did in the recent past.
Extrapolating on this singular example to all the various actors involved in creating excitement around 4DX shares, I would expect the short-term momentum in the 4DX share price to deteriorate over the upcoming months. While may see the cheer squad return, especially on days the 4DX share price gains, I take disappearing positive tweets as a heuristic signal that hype levels are likely to reduce in the near term.
Conversely, I would interpret the disappearance of negative tweets as a potential sign of increasing hype.
Another sociological heuristic I use to gauge stock sentiment is whether people are speculating that the stock is “the next <insert market darling here>”. Generally, I interpret these headlines as a sign of significant hype.
Over the years, I have seen many people claim such and such a company is “could be the next Pro Medicus.” These include Volpara, Mach7, Singular Health Group, Artrya, IMexHs and now, 4D Medical. You’ve also had “the next carsales” and “the next Cohclear” and of course “the next CSL.”
Although the title asserts 4D Medical could become the next Pro Medicus, the conclusion seems to walk back that claim.
Of course, technically, anything “could” happen.
Back in reality, it seems unlikely 4D Medical will “become the next Pro Medicus” in any meaningful sense, “over the next couple of years.” The main reason for that is 4DX is massively loss-making at present and only had about $5.7m in software-as-a-service revenue in the last year.
Rather, Pro Medicus should be seen as providing a software ecosystem that could incorporate products like the 4D Medical products.
These include diagnostic software tools for analysing lung ventilation efficacy using X-ray hardware and analysing lung ventilation and perfusion using CT hardware. Keep in mind that Pro Medicus also has an incentive to encourage the use of CT scans over X-rays, as the former provide much better diagnostic information (and also align with Pro Medicus’ competitive strengths, given the huge file sizes).
Is 4D Medical The Next Pro Medicus?
No, 4D Medical is not the next Pro Medicus.
You see, Pro Medicus needs to populate its diagnostic viewer ecosystem with specialised products, and it can accelerate that process by either paying to develop these products itself or investing in other companies that may do so. Think about it. Pro Medicus has invested in its own breast density algorithm. It has invested in Elucid, which is developing algorithms for cardiac CT. And now it has invested in 4D Medical, which develops algorithms for lung CT. It is almost as if it wants to build an ecosystem of different diagnostic tools, by helping to fund a small percentage of the total cost of development.
The sooner companies like 4D Medical and Elucid incorporate their products with Visage, the better for their own growth. There is a possibility that its distribution agreement with Pro Medicus could assist 4D Medical to grow revenue strongly, but there is no guarantee that it will happen. Pro Medicus could also hypothetically assist competitors to 4D Medical in the future.
Either way, Pro Medicus will continue offering workflow software, viewing software (already incorporating many diagnostic algorithms), and of course cloud storage of all that sensitive data.
To use a metaphor, if Pro Medicus can provide a forest, then 4D Medical can provide a delightful new creature to live in it.
4D Medical will almost certainly not be the forest.
In fact, I would say that the most likely path to success for 4D Medical is to ensure that its species thrives in the Pro Medicus forest.
But as you can imagine, this all means Pro Medicus comes to the negotiating table in a firm position.
The 4DX Investment Terms Are Great For Pro Medicus
Obviously, part of the deal is that Pro Medicus gets to distribute the 4DX product suite, since that is the strategic goal for Pro Medicus. However, the financial terms are also extremely favourable to Pro Medicus.
Not included in Nick Sundich’s article about how 4D Medical could be the next Pro Medicus are the actual terms of the Pro Medicus investment in 4D Medical, which includes security over “all assets of
the Borrower and Guarantors, including specific security over certain assets.”
Here are the repayment terms, taken from the announcement.
To put it in plain English.
- No matter what happens Pro Medicus either gets $12.5 million after 2 years (which works out at a handy 12.5% per annum) or it gets 4DX assets over which it has security.
- If the share price is higher than about 26c in 2 years, then Pro Medicus gets an extra cash payment. If the share price is around 52c, then Pro Medicus would be up for a $20m payday.
- If the share price is above 52 cents, then Pro Medicus will get shares in 4DX issued at around the price at maturity as well as the $20m. For example, if the share price was $1.04 then the calculation would look something like this (approximate only).
4DX shares equal to ($10m x (104c/26c) – $20m)/ $1.04
Next step: $10m x 4 – $20m / $1.04
Next step $40m – $20m / $1.04
Next Step: $20m/ $1.04
Solution: 19.23 million shares
Now, as you would expect from a company with financials such as this, 4D Medical has consistently diluted shareholders and handed out options.
Now, in the optimistic scenario where the 4D Medical share price is $1.04 in July 2027, then there would be at least 560 million shares on issue (and I would bet more). If we assume the company issued another 20 million shares along the way that would get us to ~580 million and then Pro Medicus would get just shy of 20 million shares. That would be about 3.3% of the company.
But perhaps the bigger win would be leveraging its halo to allow an investee company to raise capital at favourable prices, thus ensuring that someone else funds at least part of the development of the Pro Medicus software ecosystem.
Conclusion
4D Medical has genuine proven products and is therefore far more interesting than most speculative stocks. However, it seems the recent share price gain has been driven by hype, and 4D Medical would be well advised to conduct a capital raising if there is now robust demand for shares at $1.60 and above. This would genuinely increase its chances of success by providing capital on more favourable terms.
Personally, I would sell 4D Medical shares at the current price of $1.63, if I owned any. Sometimes I have tiny “research positions” in stocks like this and I could imagine buying a tiny research position but I would not hold it in any significant size right now.
Of course, I should acknowledge that I failed to predict that the stock would become the focus of promotion after PME made the loan.
In hindsight, that was probably predictable, but predicting hype cycles in speculative stocks is not what I focus on as an investor. In any event, that short-term trade opportunity is now in the rear-view mirror, and you cannot pat all the fluffy dogs.
Overall, I think the sociological signals currently seem to suggest 4DX has either passed the peak of this hype cycle, or else we are close to it.
However, hype stocks are really unpredictable. For example, even if they go down in the long term they could go up in the short term. There could always be an incremental buyer. I simply don’t know how many people there are influenced to buy hype stocks by fleeting social media posts and blue sky imaginings about it becoming “the next Pro Medicus”. The market is a chaotic system, and hype sometimes feeds off itself.
For clarity, I do not own shares in 4DX and I am not short 4DX shares.
The only reason I even wrote this article is that I had multiple supporters request a comment on the stock. While I do own Pro Medicus shares, I do not own 4DX shares and I don’t really care if the stock goes up or down. If the stock goes to zero then Pro Medicus probably gets to buy the company really cheaply, if the stock stays at current levels long enough then Pro Medicus could get extra cash and shares.
Pro Medicus will win either way.
Further reading on the hype cycle:
The Immense Power Of The Brainchip (ASX: BRN) To Drive Share Prices Higher
Disclosure: The author of this article owns shares PME and will not trade those shares for at least 2 days following the publication of this article. This article is not intended to form the basis of an investment decision and is not a recommendation. Any statements that are advice under the law are general advice only. The author has not considered your investment objectives or personal situation. Any advice is authorised by Claude Walker (AR 1297632), Authorised Representative of Ethical Investment Advisers Pty Ltd (ABN 26108175819) (AFSL 276544).
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