Is Penny Stock NXT-ID a Buy?
A developing technology company, Nxt-ID, Inc. (NXTD), is engaged in the development and commercialization of solutions for healthcare applications, payments and the Internet of Things (IoT). The company’s expansion into new customer segments and the extension of its products to federal and state agencies against a backdrop of growing need for telehealth solutions enabled it to achieve 14% year-over-year revenue growth. in the second quarter ended June 30, 2021.
However, the penny stock is down 75% since the start of the year and 38% over the past month. Additionally, the stock is currently trading below its 50-day and 200-day moving averages of $ 0.62 and $ 1.06, respectively, indicating a downtrend.
Investor anxiety surrounding the vote of a reverse stock split of its common stock, which is scheduled to be held on Oct. 15, 2021, to avoid delisting from the Nasdaq, could lead to a further fall in its shares. Additionally, NXTD’s low profitability and financial instability could make matters worse.
Here is what could influence the performance of NXTD in the short term:
Last month, NXTD announced the price of a subscribed public offering of 27.89 million common shares, including warrants to purchase up to 27.89 million common shares and 3.64 million shares. ‘shares to be issued upon exercise of the excess underwriters. possibility of attribution. The technology products and services provider expects gross proceeds of around $ 12.5 million from the offering. It intends to use the net proceeds of the offering to fund working capital, new product development and liability reduction.
Disapproval of reverse stock split could result in delisting
On September 20, the company filed a proxy with the Securities and Exchange Commission to hold a meeting of shareholders on October 15 for a vote on a division of its common stock and a division of its Series C preferred stock, primarily to allow NXTD to comply again with the minimum bid price requirement of the NASDAQ Capital Market and to honor the commitments made to certain holders of warrants. However, if the company’s shareholders do not approve the reverse stock split, NXTD’s common stock will be subject to delisting, which will negatively affect its market valuation and liquidity.
NXTD’s total operating loss increased 104.9% year-over-year to $ 211,672 in the second quarter ended June 30, 2021. It reported a net loss of $ 555,748 and a net loss per share of 0 , 02 $. The company’s total operating expenses increased 6% from the prior year quarter to $ 2.03 million. For the six-month period ended June 30, 2021, NXTD’s net decrease in cash and restricted cash was $ 1.14 million. Its revenue declined 16.2% year-on-year to $ 5.22 million during that period.
The company’s revenue has declined at a CAGR of 14.6% over the past three years. In addition, its total assets declined at an annualized rate of 16.1% during this period.
NXTD’s EBITDA margin and last 12 months net profit margin are negative at 16.2% and 71%, respectively. In addition, its ROE, ROA and ROTC are respectively minus 86.4%, 29% and 7.8%. In addition, its 12-month asset turnover rate of 0.4% is 35.7% lower than the industry average of 0.7%. In addition, the company’s operating cash flow for the past 12 months is negative at $ 2.74 million, compared to the industry average of $ 112.30 million.
POWR ratings reflect grim prospects
NXTD has an overall D rating, which translates to Sell in our POWR odds system. POWR scores are calculated taking into account 118 different factors, each factor being weighted to an optimal degree.
Our proprietary scoring system also rates each stock against eight different categories. NXTD has a D rating for quality. This justifies the negative profit margin of the title.
It has a D rating for stability, in line with its 5-year monthly beta of 1.88.
Additionally, the company has a Momentum rating of C, consistent with its price drop over the past month.
In addition to the ratings we have highlighted, one can check out additional NXTD ratings for sentiment, growth and value. here. The stock is ranked # 41 out of 46 B-rated stocks Technology – Material industry.
NXTD has lost 57.5% in the past three months. While the growing need for state-of-the-art healthcare applications and telehealth solutions has enabled the company to expand its customer base and develop innovative solutions to meet specific needs, its profit margin negative impact and insufficient financial strength continue to be major concerns for investors. In addition, the uncertainty surrounding its vote on the stock split proposal to avoid delisting from the Nasdaq could pose a risk to NXTD’s shares in the near term. So, it might be wise to avoid the stock now.
How does Nxt-ID, Inc. (NXTD) compare to its peers?
Although NXTD has an overall POWR rating of D, you may want to consider investing in tech – hardware stocks with an A (strong buy) rating, such as Seiko Epson Corporation (SEKEY) and Canon, Inc. (CAJ).
NXTD shares fell $ 0.00 (-0.05%) on Wednesday after-hours trading. Year-to-date, the NXTD has fallen -75.00%, compared to a 17.46% increase in the benchmark S&P 500 over the same period.
About the Author: Imon Ghosh
Imon is an investment analyst and journalist with a passion for financial research and writing. She started her career at Kantar IMRB, a leading market research and consumer advisory organization. Following…