Ideanomics [IDEX] is a relative newcomer to the stock exchange. The company operates in the fintech space, focusing on a number of ventures, such as:
- Opening up the electric, battery-operated vehicle (BEV) space commercially
- Creating next-level financial services
- Creating other fintech products
Their BEV division helps provide deep discounts for companies seeking fully electronic commercial vehicle fleets, while its Capital division helps facilitate global buying power through blockchain technology.
The company is the self-proclaimed solution for streamlining orders for different types of fleets. In a nutshell, it is the facilitator of sales and take a cut for facilitating purchases through their blockchain ledger.
IDEX forayed into electric vehicle fleet leasing in the hopes it could capitalize on an underrepresented segment of the market. It simplifies ordering, processing, and fulfillment because they can take care of all documentation, verification, inspections, and leasing in-house.
It can take a cut of anywhere between 5-10% per transaction. But the issue here with sustainability lies in the fact that it only provides this service for commercialized fleets. Consumer transactions are where the auto industry generates the bulk of its revenue.
Is Ideanomics Stock a Buy?
In March 2020, Ideanomics stock hit a low of $0.34/share. This is when the COVID scare was at its peak.
Since the stock market panic has somewhat subsided, Ideanomics soared back to life, increasing by over 267% to July 2020’s trading value of $1.25/share.
While that’s certainly a great jump on things, $1.25/share still makes it technically a penny stock, and so it doesn’t really scream “buy now”.
With such a low trading price, maybe there are some risks to investing in Ideanomics.
Be Wary Of Ideanomics
There’ve been many companies over the years that, while they look alright on paper – or don’t look so good – analysts and investors alike keep their wallets tightly in fist. Some of the risk factors to consider with Ideanomics include:
How Much Debt Does Ideanomics Have?
By the end of 2020 Q1, the company was saddled with over $20 million of debt – an increase of $3.5 million from Q1 2019. But, in the company’s defense, it does have nearly $6 million in cash-on-hand to offset this – making for a net debt of around $15 million.
What Are Ideanomics Liabilities?
Ideanomics’ last balance sheet reported liabilities of over $30 million due within the next year in addition to liabilities of over $30 million with due dates extending beyond one year. It sounds bad, right?
At the same time, the company had cash-on-hand of nearly $6 million and just over $3 million in accounts receivable due with the next 12 months. Yep, it is bad.
Those liabilities far outweigh their cash and receivables to the tune of around $52 million.
On the other hand, its publicly traded shares are worth over $288 million. Perched precariously on a financial ledge, investors should pay close attention to the company’s balance sheet in the coming months and years.
Usually, a company’s balance sheet is the focal point when you’re analyzing their debt – but for Ideanomics, it’s actually their earnings that will drive future prospects.
So, How Are Ideanomics Earnings?
Ideanomics revenues seem to fall as fast as an anvil – but if you look at their earning before interest and taxes, their EBIT, the numbers are even less attractive.
Considering EBIT, Ideanomics lost $19 million. This coupled with the above liabilities pretty much sums up the fact – Ideanomics should stop racking up debts.
Its balance sheet is a bit strained. It’s not too late, though, for this company to turn things around – but a negative cash flow to the tune of $14 million over the past year doesn’t beautify the stock much.
Will Ideanomics’ Competitors Beat It?
That’s a good question. The thing is, Ideanomics clearly, as shown above, is currently banking on their foray into fleet vehicle purchases, specifically electric battery-operated cars and trucks from China.
Yet, according to Owler, the company’s industry is internet software. Using this information, its closest competitors are software companies like Canto (privately held), MediaValet (not yet approved for exchange), and Securitize (privately held).
- Canto – $0
- MediaValet – $30.9 million
- Securitize – $26.8 million
- Ideanomics – $63.6 million – WINNER
- Canto – $42 million – WINNER
- MediaValet – $3.7 million
- Securitize – $4 million
- Ideanomics – $18 million
But, if we approach competition in regard to Ideanomics’ newest foray into electronic vehicle fleet purchases, we’ve got some different competition indeed.
- Amazon – $280.5 billion
- DHL – 63,34 billion Euro
- Ideanomics – shown above
Stock price of each competitor
- Canto – privately held
- MediaValet – $0.99/share
- Securitize – privately held
- Amazon – $2999.90/share
- DHL – as Deutch Post – $39.89/share
- Ideanomics – $1.27/share
Ideanomics Stock Forecast: The Bottom Line
In the short term, the price of Ideanomics stock is predicted to bottom out around $0.89/share around one year from now. But if you buy now and hold, the stock is projected to rise to as much as $2.69/share five years from now.
Depending on your growth strategies for your portfolio and how many shares you’d be interested in, this could be a good snag right now to more than double your investment if you can hold – for the next half decade.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.