No doubt, there’s quite a lot of questions on investing in SOS Limited (NYSE:SOS) inventory.
The Chinese firm calls itself an “rising blockchain-based and massive data-driven advertising and marketing and options supplier as nicely as cryptocurrency mining operator.” That’s so much to pack in any mission assertion.
SOS says it’s coming off an excellent yr with monetary outcomes that exceeded expectations. It’s making a sequence of strikes to scale up its cryptocurrency-mining operations and expects even higher ends in 2021.
There are others, nevertheless, that recommend that SOS isn’t what it says it’s. A famous quick vendor says SOS is simply making up key particulars of its story. And the corporate has been lower than clear about its financials.
On the floor, firms like SOS is usually a worthwhile strategy to play the crypto market with out investing in a particular coin. That’s what makes SOS so fascinating.
But no matter what facet of the coin you’re taking a look at with SOS inventory, it behooves traders to take an in depth have a look at this crypto-mining play.
An Up and Down Ride
SOS was safely a penny inventory till February, when the corporate introduced it started mining cryptocurrencies. It additionally introduced it was beginning companies related to blockchain safety, insurance coverage and banking. The inventory rose to almost $16.
But then allegations by Hindenberg Research — which acknowledged having a brief stake in SOS inventory — alleged that the corporate was committing fraud.
Hindenberg mentioned that the corporate’s workplace and headquarters have been merely a lodge. It alleged that SOS falsified the background of a key worker. And it additionally raised doubts that SOS owned cryptocurrency mining rigs in any respect.
SOS fought again in opposition to the allegations, calling it “a deceptive and fraudulent short report.” But it wasn’t sufficient to maintain the SOS inventory worth from collapsing once more.
SOS Stock at a Glance
In May, SOS introduced full-year monetary outcomes for 2020. Revenue was posted at $50.3 million, which was a rise of 333.6% from 2019. Most of the income got here from the corporate’s insurance coverage advertising and marketing enterprise, which was $49.2 million.
SOS says it banked a gross revenue of $13 million, which was a rise of 513.5% from 2019. Net revenue was $4.4 million, or 1.35 cents per share. That was up barely from 2019, when the corporate posted a internet revenue of $1.5 million, or 2.5 cents per share.
CEO Yandai Wang mentioned he was happy with the outcomes:
“We will proceed to leverage our information mining and evaluation platforms, with a aim of growing a sturdy pipeline for insurance coverage advertising and marketing and -related service merchandise. With a robust monetary place, the whole SOS workforce is targeted on the execution and supply of the Company’s strategic development plan in advertising and marketing information enterprise, Blockchain-based insurance coverage and safety administration enterprise, and cryptocurrency mining with the aim of considerably growing shareholder worth.”
But maybe extra notably, SOS says it’s persevering with to make some important investments in rising its cryptocurrency mining capabilities.
Just this spring, SOS says it:
Obviously, SOS is investing closely to change into a participant within the crypto-mining area.
The Bottom Line
Cryptocurrencies have had a rocky run as of late, though they’re exhibiting some indicators of life. But if you happen to imagine within the long-term way forward for cryptos, then you need to take into account SOS as a possible play.
Few issues, if any, are surefire ensures in investing, and the quick report from Hindenberg casts a shadow on SOS inventory.
SOS hasn’t but proven earnings from its cryptocurrency-mining enterprise, however that ought to come quickly. What sort of revenue the crypto-mining unit supplies shall be key for SOS inventory shifting ahead.
On the date of publication, Louis Navellier didn’t maintain (both straight or not directly) any positions within the securities talked about on this article.
The InvestorPlace Research Staff member primarily answerable for this text held LONG positions in BTC and ETH. The opinions expressed on this article are these of the author, topic to the InvestorPlace.com Publishing Guidelines.
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