Following Reddit’s online forum r/WallStreetBets’ (WSB) huge success in squeezing short sellers out of their positions in struggling GameStop (GME) and significantly gaining from it earlier this year, the market has seen a wave of short squeezes.
However, the fundamental weaknesses in most of the Reddit plays have caused their short squeeze to be short lived, and the stocks declined quickly after hitting their highs.
Considering the clear disconnect between the fundamentals and price levels of Reddit favorites Blink Charging Co. (BLNK), Ideanomics Inc. (IDEX), Zomedica Corp. (ZOM), and AYRO Inc. (AYRO), we think it’s wise to avoid them now. These stocks have witnessed significant price declines lately and are susceptible to further price retreats.
Blink Charging Co. (BLNK)
BLNK owns, operates, and provides EV charging equipment and networked EV charging services. It also provides Blink Network, a cloud-based system that operates, maintains, and tracks various charging stations and associated charging data, as well enables the remote monitoring and management of stations and payment processing. BLNK offers over 23,000 EV charging equipment in the United States and worldwide.
BLNK has inked an agreement with General Motors (GM) to make public charging more convenient for GM vehicle owners. As part of GM’s Ultium Charge 360, EV customers will soon be offered seamless access to publicly available BLNK EV charging sites across the United States. BLNK also entered a reseller agreement last month with ev Transportation Services Inc. (evTS), an electric vehicle manufacturer that is focused on the essential services and urban mobility markets. It has agreed to distribute BLNK’s EV charging equipment to fleet customers, along with its FireFly ESV essential services vehicle. The relationship also pairs BLNK’s new IQ 200-M portable EV charger with evTS’ FireFly and delivers a fully electric EV Roadside Assistance Vehicle solution.
BLNK is scheduled to release its earnings report for the first quarter, ended March 31, on May 13. In the fourth quarter, BLNK’s revenue surged 250% year-over-year to $2.5 million, driven primarily by robust demand for its commercial and residential products. BLNK deployed, sold, or acquired 1,136 commercial and residential EV charging stations. Notably, the number of commercial Blink-owned charging stations contracted or deployed during the quarter grew by 51% during the quarter. However, the company’s loss widened, and its net loss came in at $7.9 million compared to a $2.9 million year-ago loss of $2.9 million.
The accelerating adoption of EVs worldwide represents an enormous opportunity for EV infrastructure providers, and BLNK aims to offer reliable charging options. The company is systematically expanding its footprint and growing its brand recognition by capturing premium locations and establishing strategic partnerships. However, BLNK’s EPS is expected to remain negative in its fiscal years 2021 and 2022. Analysts expect the company’s current quarter and current year EPS to decline 54.5% and 3.4%, respectively.
In terms of forward EV/Sales, BLNK is currently trading at 135.00x, 7,866.3% more expensive than the 1.69x industry average. BLNK is highly overvalued in terms of forward P/S also (136.85x versus 1.42x). BLNK has lost more than 30% over the past three months to close yesterday’s trading session at $35.26. However, the stock has returned 2,024% over the past year.
BLNK’s POWR Ratings reflect a bleak outlook. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
The stock has an F overall rating , which translates to Strong Sell in our proprietary rating system. BLNK has an F grade for Value, Stability and Quality. It is ranked #87 of 87 stocks in the B-rated Industrial – Equipment industry.
In total, we rate BLNK on eight different levels. To see additional POWR Ratings for Growth, Momentum and Sentiment, click here.
Ideanomics Inc. (IDEX)
New York-based IDEX focuses on driving the adoption of commercial electric vehicles (EVs), associated energy consumption, and developing financial services and fintech products. Its Mobility division is a service provider that facilitates the adoption of EVs by commercial fleet operators, while its Capital division is focused on disruptive fintech solutions for the financial services industry.
On April 21, IDEX took a 20% ownership stake in FNL Technologies, which operates the popular social media platform hoo.be, through a cash and stock consideration. FNL has also acquired a 100% stake in IDEX’s digital advertising subsidiary, Grapevine Logic, as part of the deal. Also, IDEX’s Malaysia-based E-bike subsidiary, Treeletrik, inked a multi-year deal last month to supply 200,000 units of its electric motorbikes to Indonesia, via distributors PT Pasifik Sakti Enjiniring and the Nahdatul Ulama Board (PBNU).
IDEX will host a conference call on May 17 to discuss the results of its first quarter, ended March 31. Its revenue for 2020 was $26.8 million, compared to $44.57 million in the prior year. However, its EV revenue in 2020 was $19.5 million, rising more than 600% year-over-year. Notably, its annual revenues included its first sales of charging & battery systems. However, the company reported a $106 million net loss for the year, widening from the $96.83 million prior year loss. IDEX’s Digital Asset Management Services generated $40.7 million in revenue in its fiscal year 2019 but produced no revenues in 2020. In fact, service is not expected to produce any revenues for the foreseeable future. However, the company expects revenues from its charging systems to grow through WAVE, its inductive charging business acquired in January this year. However, even though IDEX has been diversifying its product portfolio, there is no hint of breakeven.
IDEX’s forward EV/Sales ratio currently stands at 9.94, 133.7% higher than the4.25 industry average. In terms of forward P/S, the stock is currently trading at 11.30x, significantly higher than the 4.00x industry average. IDEX closed yesterday’s trading session at $2.61, falling 50.7% over the past three months. Even though the stock is currently trading 52.8% below its $5.53 52-week high, it is still up more than 30% year-to-date.
It is no surprise that IDEX has an overall F rating, which equates to Strong Sell in our POWR Ratings system. IDEX also has an F grade for Value and Stability along with a D for Quality. It is ranked #114 in the 122-stock D-rated Software – Application industry.
Click here to see the additional POWR Ratings for IDEX (Growth, Momentum and Sentiment).
Zomedica Corp. (ZOM)
Michigan-based developmental-stage veterinary diagnostic and pharmaceutical company ZOM creates products for companion pets (canine, feline and equine) by focusing on the unmet needs of clinical veterinarians. The company’s product portfolio aims to include innovative diagnostics and medical devices that emphasize patient health and practice health.
ZOM had been a major underperformer since 2016 but captured the limelight with its plans to commercialize its first flagship product, Truforma, last November. Truforma is a biosensor platform covered by more than 70 patents that assists veterinarians in diagnosing complex conditions in cats and dogs. ZOM recorded its first commercial veterinarian sale of the platform in March. And on April 15, it declared its intention to expand its direct sales organization for its Truforma Platform, while phasing out its distributor-based sales efforts.
Since ZOM is still in its development stage and only made its first sale in March, the company recorded no revenues in 2020. The company had $62 million in cash and cash equivalents as of December 31 compared to $0.5 million in the prior year. This increase resulted from $56.5 million in proceeds from two equity offerings of common shares and warrants during the year. However, the company spent $8 million on research and development during the year. As a result, ZOM reported a $16.9 million loss for the year, compared to a year-ago loss of $19.8 million.
ZOM has a compelling and emerging business case that is riding on a first-mover advantage. However, it appears that ZOM’s stock has run too far on the back of unwarranted product-launch optimism. Even though the company expects Truforma to enjoy strong demand in the veterinary marketplace, it is too soon for investors to bet on the platform’s ability to disrupt the veterinary diagnostics market.
In terms of trailing-12-month P/B, ZOM is currently trading at 12.07x, 169.3% more expensive than the 4.48X industry average. With a 290% year-to-date gain, ZOM closed yesterday’s trading session at $0.90. However, the stock has started to lose momentum and is down 38.4% over the past month. ZOM is currently trading 69% below its $2.91 52-week high.
ZOM’s poor prospects are also apparent in its POWR Ratings. The stock has an overall D rating, which equates to Sell in our proprietary rating system. ZOM has a D grade for Value, Stability and Quality as well. In the 232-stock F-rated Medical – Pharmaceuticals industry, it is ranked #215.
To access additional POWR Ratings of ZOM for Growth, Momentum and Sentiment, click here.
AYRO Inc. (AYRO)
Texas-based AYRO designs and manufactures purpose-built, light-duty, emissions-free electric vehicles for urban and community transport, local delivery, closed campus mobility, recreational, and government use. It offers AYRO 311, a three-wheeled vehicle for professional and personal use, Club Car 411 for low-speed logistics and cargo services for campus, and AYRO 511 4×4 concepts.
On March 17 AYRO entered an agreement with Element Fleet Management, the world’s largest pure-play automotive fleet manager. The deal seeks to combine AYRO’s marketing, engineering, and production expertise with Element’s fleet management capabilities, global footprint and consulting experience. Notably, the companies aim to support the deployment of large fleets of AYRO electric delivery vehicles over the next four years. Furthermore, AYRO launched an industry-first electric vaccine vehicle (EVV) earlier this year with partners Element, Club Car, and Gallery Carts to expand access to COVID-19 vaccination and testing.
For its fiscal year 2020, ended December 31, AYRO generated $1.6 million in revenues, surging 80% year-over-year. AYRO has not yet reached the mass production-stage and is still in the early stages of the EV cycle. Its adjusted EBITDA loss came in at $7.8 million for the fiscal year versus a loss of $4.4 million in the comparable period last year. AYRO reported a $11.2 million loss, further widening from the $8.6 million year-ago loss.
AYRO aims to deliver more than 20,000 light-duty trucks and electric delivery vehicles over the next three years and estimates this production goal to have a value more than $300 million. In addition to launching EVV in the near-term, AYRO expects to launch its 411x light-duty EV truck in 2021 and unveil its 311x later this year. In fact, scaled production for the 311x is expected to begin in the first half of next year. In addition, the company has still to design its 511-concept.
AYRO’s forward EV/Sales ratio currently stands at 5.77, 240.7% higher than the 1.69 industry average. The company’s trailing-12-month P/S is 52.87x, while the industry average is at 1.59x. AYRO closed yesterday’s trading session at $5.07 and has lost nearly 23% in the past month. Though the stock has retreated 55.9% from its $11.50 52-week high, it has returned more than 90% over the past year.
AYRO’s POWR Ratings are consistent with its weak fundamentals. The stock has an overall F rating, which equates to Strong Sell in our proprietary rating system. It has been accorded an F grade for Stability and Quality, and D for Value. It is ranked #47 of 53-stocks in the B-rated Auto & Vehicle Manufacturers industry.
Beyond what we stated above, we have also given AYRO grades for Growth, Momentum and Sentiment. Get all AYRO ratings here.
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BLNK shares were trading at $35.37 per share on Wednesday afternoon, up $0.11 (+0.31%). Year-to-date, BLNK has declined -17.26%, versus a 11.98% rise in the benchmark S&P 500 index during the same period.
About the Author: Sidharath Gupta
Sidharath’s passion for the markets and his love of words guided him to becoming a financial journalist. He began his career as an Equity Analyst, researching stocks and preparing in-depth research reports. Sidharath is currently pursuing the CFA program to deepen his knowledge of financial anlaysis and investment strategies. More...
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