Moxian, Inc. (MOXC - Get Rating) operates as a cloud-based scheduling and networking company and social network company, integrating businesses and social media websites into one platform. Though based in Hong Kong, MOXC operates in China.

MOXC has been one of the biggest gainers over the past year. The stock has gained 2,664.1% over the past year and 1,126.8% year-to-date. Furthermore, MOXC has advanced 198.2% over the past month to close yesterday’s trading session at $11.39.

The stock successfully dodged the tech sell off earlier this month to gain in triple digits. However, given MOXC’s poor financials, its current price levels look unsustainable. In fact, the stock lost 32.4% intraday on May 27.

Click here to check out our Software Industry Report for 2021

So, here’s what we think could shape MOXC’s performance in the near term:              

Recent Developments

MOXC was scheduled to merge with Btab Group, Inc. earlier this year, according to a share exchange agreement signed on August 27, 2020. Given Btab’s multinational market presence across Australia, the United Kingdom, the United States and China, the acquisition would  have helped MOXC to develop its platform globally. The deal fell through in March, however. .

Given China’s censorship rules on social media platforms, MOXC’s growth is expected to have a glass ceiling unless it expands its operations abroad.

Poor Financials

MOXC’s trailing-12-month revenues came in at $585,981. This compares to $946,466 in annual revenues for the year ended September 29, 2020. Also, the company reported a $2.07 million operating loss over the past year. MOXC lost 13 cents per share in the trailing 12 months.

Furthermore, the company is bleeding cash from its operations. Its trailing-12-month cash outflow from operating activities stood at $1.88 million.

Trading at a Premium Valuation

In terms of trailing-12-month Price/Book ratio, MOXC is currently trading at 141.95, 3,663.5% higher than the 3.77 industry average. The company’s 467.81 trailing-12-month Price/Sales multiple is significantly higher than the 1.62 industry average.

Also, OXC’s 536.27 and 2,068.74 respective trailing-12-month EV/Sales and EV/EBITDA ratios compare with the industry averages of 1.78 and 14.29.

Unfavorable POWR Ratings

MOXC has an overall F rating, which equates to Strong Sell in our proprietary POWR Ratings system. The POWR Ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree.

The stock has an F grade for Quality, Value and Stability. The company’s negative ROE is in sync with the Quality grade, while its relatively high beta of 3.46 is consistent with its Stability grade. MOXC’s sky high valuation compared to its peers justifies the Value grade.

Of the 45 stocks in the D-rated Internet – Services industry, MOXC is ranked #44. In addition to the grades we’ve highlighted, one can view MOXC Ratings for Momentum, Sentiment and Growth here.

Bottom Line

MOXC’s unique business model has attracted many investors, as evident from its price gains. However, we think the company’s limited growth potential and market exposure make the stock best avoided now.

Click here to check out our Software Industry Report for 2021