Media technology

Built-in multimedia technology: leave this action alone

Olemedia/E+ via Getty Images

The title says it all. I will not bury the lead. Shares of Integrated Media Technology Limited (NASDAQ: IMTE) have taken a rocket ride over the past few weeks. By Thursday’s close, shares were up more than 450% from the February closing price. With such a move, investors might take notice and wonder if Integrated Media Technology Limited is a buy. This company now trades at 300x enterprise value versus sales of a mix of news hype, low float and pure momentum. I wouldn’t touch it here.

What is Integrated Media Technology Limited?

In fact, there is not a huge amount of information about this company. Even the company’s website leaves a lot to be desired in some areas. Interested in news related to the organization? Better to look elsewhere.

IMTE news page

IMTE news page (imtechltd.com)

On the society who we are pagethe company describes itself as follows:

Integrated Media Technology Limited is a technology investment, product development and distribution company established in 2008, headquartered in Hong Kong with offices in Australia and China. We are engaged in the investment, development and commercialization of visual technology with a focus on glasses-free 3D display technology (also known as autostereoscopic 3D).

Some of the product offerings include virtual reality and laminated glass. The stock has strayed far from a recent news article claiming the launch of an NFT market called Ouction. While I admit that the synergies of a VR technology and NFTs sound interesting, I don’t see much substance to the announcement. The stock itself has a very low float just 3.7 million shares.

price action

The painting speaks for itself. For most of the past year, stocks have traded in the range of $4 to $5 per share. Following the Ouction market news, the company saw a 185% rally which was followed by a 60% bleed from mid-January to early March. The rest is history. Since printing a local low at $4.88 on March 7, the stock has rebounded nearly 600% in a straight line.

Daily Chart IMTE 33122

IMTE daily chart (investing.com)

Overbought is an understatement. At two different times since the start of the year, IMTE shares have traded above 90 RSI-14. The rally was only briefly compromised on March 17 when the company agreed to sell 20 million dollars into shares as part of a private equity offering. The valuation of these stocks was $4.50 and the stock fell 40% during the day before finally recovering and resuming the upward trend.

Finances and evaluation

With a six-figure market capitalization, one would expect to see a robust top line or a rapid positive revenue trend. In the case of IMTE, we are offered neither. The evolution of income is not ideal.

IMTE revenue trend

IMTE Revenue Trend (looking for Alpha)

Despite this sharp decline in revenue since 2016, revenue costs have remained quite high. Resulting in a fairly negative gross margin story.

IMTE gross margin

IMTE Gross Margin (Seeking Alpha)

Although not as low as the true -744% two years ago, the current gross margin of -115% is not ideal. After the positive gross margin started to fade in early 2017, the company spent money quarterly for four years. Shares of the company now trade at an enterprise value-to-sales ratio of 300x.

EV to IMTE sales

EV to sales (seeking Alpha)

There’s nothing better than looking at other metrics that have traditionally mattered when trying to value a business. The point has probably landed. It’s not a company I would call financially sound or a stock I would call cheap.

Where is Ouction?

Ouction’s NFT market doesn’t seem to exist yet. I couldn’t easily find anyone talking about it on normal social media where you’d expect to see NFT chatter and news. Participants in stock chat channels all seem to be focused on price rather than anything else. Which makes sense, because the only thing that seems to determine the price is the price itself. From the company own website shares very little auction market information and provides no links to the service.

The most recent press release for marketplace Ouction reports a one-year NFT deal with Hong Kong-based Wan Fung Art Gallery. This gallery appears to actually exist and contains Google Maps images submitted by users to the address documented on the Wan Fung Art Gallery website.

It’s still a dangerous short

Bypassing these kinds of names can be very dangerous. Ask Melvin Capital. I don’t recommend shorting stocks like this unless you’re a very sophisticated trader. I don’t know if the peak of this one is yet, but I think it’s almost certainly near.

IMTE borrowing rate

IMTE borrowing rate (iborrowdesk)

While I recognize that I just made the opposite point regarding fuboTV in regards to available short actions, I believe any pressure on shorts in IMTE has already happened. Because the free float on IMTE shares is so small, it is a very expensive stock to borrow and considerably easy to move to fairly low volume when momentum picks up.

Conclusion

As a trader, you like these types of stocks because you can make ridiculous returns in a very short time. Unfortunately, these returns come at the expense of real people. Real people who are generally not sophisticated investors and have very little experience buying stocks. Not so long ago, I studied in the stock market after down for a fast moving money incinerator too. Integrated Media Technology Limited sold shares at $4.50 less than 3 weeks ago. You don’t need to buy it at $30 today.

One more thing

There’s a lot of action in the digital space that I like, though. And I’m very optimistic about the NFT space in general. If you’re interested in these kinds of ideas, keep an eye out for a very special offer coming up.


Source link