MICT Inc (NASDAQ: MICT) has had a rough go in the stock market over the past month and a half. With excitement brewing early this year about a coming trading platform, strong execution on the insurance side of the coin, and plenty of cash on the balance sheet to continue to execute, the stock flew to nearly $3 per share by mid March.
Today, it’s trading at around $1.60. So, what’s the deal? Did a product flop? Did management announce more dilution coming down the line? Were there problems in a test? No!
The big issue is that the retail community is impatient, but that’s good news as the impatience of today’s retail investor is creating a compelling opportunity that shouldn’t be ignored.
What Investors Are Waiting For
One of the key points of interest in MICT for investors is the company’s coming launch of its trading platform. In mid-March, the company announced that it achieved Hong Kong licensing, which gave it the greenlight to move forward with its platform, and putting in line with the likes of Up Fintech Holdings (NASDAQ: TIGR) and Futu Holdings (NASDAQ: FUTU).
That’s huge news!
In fact, to this day Up Fintech Holdings hasn’t achieved its Hong Kong License, finding a workaround by licensing out of New Zealand, where it has been reprimanded twice since, but that’s a topic for a different conversation.
When the announcement was made in mid-March, the company said that it would be starting beta testing in a matter of weeks. Messages across social media suggest that investors misunderstood this statement to mean that the platform would be launched in a couple of weeks.
The fact of the matter is that these beta tests are known to last for six to 10 weeks, meaning that given when the announcement was made, we’re nearing the middle of this timeframe. All in all, I believe this testing is going well and that in a few week’s time, we’ll hear about the launch.
However, the misunderstanding among retail investors led to many selling their positions as they lost patience, resulting in the significant declines we’ve seen since that are actually creating a compelling opportunity.
Why Investor Should Consider Jumping Back In
Ultimately, there’s a lot going on at MICT, with big catalysts right around the corner. Moreover, some investors have been talking about dilution, but I’d venture to say that we’re not going to see any of that any time soon considering the more than $130 million the company has in the bank. And may I remind you, MICT currently trades with a market cap of around $180 million, so cash makes up most of that cap.
Beyond the significant undervaluation when you look at the market cap compared to cash on hand, there are more reasons to be excited.
- Trading. The trading platform is likely right on schedule, with an announcement of the launch coming in weeks. This announcement has the potential to send the stock screaming for the top.
- Insurance. MICT is firing on all cylinders when it comes to the insurance side of the business too. Don’t forget, the company recently announced that it got the license to sell its products across China, opening the door to a massive new audience, which I’d imagine the company is tapping into as we speak.
- Commodities Trading. Aside from the trading platform and insurance, the company made an announcement earlier this year that I think investors have lost sight of. It entered into an agreement with the Shanghai Petroleum and Natural Gas Exchange, under which it will facilitate a large portion of trades that take place, generating revenues.
My friends, we’re talking about a company that was pre-revenue just last year that’s making all of these big moves.
The Bottom Line
The bottom line here is simple. When it comes to MICT, we’re talking about a stock that has been battered, not by the inadequacies of the company itself, but by the general lack of patience of the retail investing community.
That’s not a bad thing either.
Ultimately, the significant declines in the stock create an opportunity to get in on future gains at a steep discount. One look at the company’s market cap in comparison to its cash on hand points to a significant undervaluation. That mixed with the catalysts that are on the horizon makes MICT stock one that’s hard to ignore.
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Disclosure. CNA Finance is not a financial advisor or broker dealer. This article does not constitute a solicitation to buy any stock mentioned. The article represents the honest opinions of the author, but not necessarilly the outlet it was published on. CNA Finance has a monetary relationship with MICT. Trading in penny stocks can result in the loss of capital.