Is the built-in multimedia technology a good software stock to buy under $4?
Hong Kong-based Integrated Media Technology (IMTE) is known for its glasses-free 3D display technology. But its stock price has fallen almost 7% over the past month to close yesterday’s trading session at $3.95. So, can the stock bounce back thanks to its new IoT business unit? Keep reading to learn more.
Based in Wan Chai, Hong Kong, Integrated Media Technology Limited (IMTE) is a lesser-known company that develops, sells and distributes 3D autostereoscopic display (ASD) technology products and services in Hong Kong, China, Korea, Singapore and Australia. The company launched its new Internet of Things (IoT) business unit in February 2021 by agreeing to acquire a 70% stake in Shenzhen Koala Wisdom Fire Engineering Co., Ltd.
However, IMTE’s stock price was down 6.6% over the past three months and 6.8% over the past month to close yesterday’s trading session at $3.95. Shares of the company soared to a 52-week high of $10.67 on March 23, solely on the basis of discussions on social media regarding its potential link to the non-fungible token (NFT) craze.
Additionally, the company’s operating loss in its 2020 fiscal year fell to $6.15 million from a loss of $11 million in 2019. Its net loss was $10.03 million. dollars in its 2020 fiscal year compared to $15.65 million the previous year. IMTE also raises funds by selling its shares to support its growth. Thus, its near-term outlook looks bleak.
Here’s what we think could influence IMTE’s performance in the short term:
Growing uncertainty surrounding logging activities in Hong Kong
On July 16, the Biden administration warned that American companies face several risks posed by China’s national security law in Hong Kong. The notice advised companies to consider potential reputational, economic and legal risks of maintaining a presence or staff in Hong Kong and that they should exercise due diligence.
Additionally, Hong Kong is in talks to pass a set of strict amendments to the Personal Data (Privacy) Ordinance (PDPO) against doxing, which is a common term referring to the act of publishing or disclose a person’s personal information. However, several concerns have been raised about the vague definition of doxing and the increase in content blocking over the past few weeks, and he somewhat anticipated that this decision could hamper freedom of information. Consequently, several technology companies, including Hong Kong-based IMTE, are expected to be negatively affected.
Sell stocks to finance growth activities
IMTE announced on July 6 that it had entered into three securities purchase agreements with three accredited investors for the sale of its common stock for a total of $2.80 million. The company is expected to use the net proceeds to purchase equipment for its electronic glass business and working capital. It also announced the closing of a direct stock offering on March 25 for cash proceeds of approximately $4.58 million. IMTE is expected to use the net proceeds to strengthen its balance sheet and further expand its switchable glass, nano-coated filter and financial research businesses. However, this share issue is expected to result in share dilution.
In terms of trailing 12-month EV/S, IMTE’s 28.49x is 546% higher than the industry average of 4.41x. The stock’s P/S of 12.28x over the last 12 months is nearly 196% above the industry average of 4.15x. His last 12 months 20.53x Price to book is also significantly above the industry average of 4.82x.
POWR ratings reflect bleak outlook
IMTE has an overall D rating, which is equivalent to Selling in our POWR Rankings system. POWR ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
Our proprietary scoring system also rates each stock against eight different categories. IMTE has an F rating for value, consistent with its industry-leading valuation ratios. Additionally, it has an F rating for stability, which is in line with its beta of 2.27, indicating extreme volatility.
The stock also has an F rating for quality. This is justified given IMTE’s negative values for 12-month gross profit margin and ROTC compared to the respective industry averages of 48.60% and 4.51%.
Better than IMTE: Click here to access the 24 highest rated stocks in the same sector.
Even though IMTE is a low-priced stock trading below $4, its valuation is stretched given its near-term growth prospects. Additionally, the company has reported losses over the past three years. Additionally, IMTE is currently trading below its 50-day and 200-day moving averages of $4.36 and $4.69, respectively, indicating that the stock is in a downtrend and may continue to decline. So, we think it’s wise to avoid the stock now.
IMTE shares fell $3.95 (-100.00%) in premarket trading on Wednesday. Year-to-date, IMTE has gained 1.28%, compared to a 16.05% rise in the benchmark S&P 500 over the same period.
About the Author: Manisha Chatterjee
From an early age, Manisha was very interested in the stock market. She majored in economics at university. and has a passion for writing, which led her to pursue a career as a research analyst.
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