DPW Holdings Inc. (NYSE:DPW) slump in the market continues to gather momentum even on the company serving a number of catalysts that in normal circumstances would have triggered a bounce back. After shedding more than 90% in market value, the stock is currently flirting with two-year lows.
DPW Price Analysis
While the sell-off raises serious concerns about the stock’s long-term prospects, the company appears to be firing on all cylinders when it comes to business operation. For starters, it is fresh from announcing a $1.03 million contract from a repeat client via one of its subsidiaries.
The diversified holding company is also fresh from announcing an expansion plan in partnership with IAM Inc. The markets also appear to have shrugged off a solid quarterly report.
Amidst a string of positive developments, the stock has continued to edge lower. The stock is currently languishing at the $0.17 mark, which happens to be two-year lows. Price action activity indicates that the stock will continue to drop as short sellers remain in firm control.
After the recent plunge, the stock needs to rally and stabilize above the $0.50 mark to avert a further slide. The $0.50 is the immediate critical resistance level on any bounce back from current lows.
Widening Net Loss
The diversified holding company is fresh from reporting a 159% increase in Q3 revenues that came in at $8.3 million. Net loss, on the other hand, widened to -$7.5 million compared to a net loss of -$2.1 million reported a year earlier. Gross Margin shrunk to 24.3% from 34% reported a year earlier.
According to the Chief Executive Officer, Milton Ault, revenue increase reflects growth among acquisitions in defense, power supply, and hospitality. Plans are already underway to enhance leadership and increase focus on strategic growth. The company intends to improve sales and operations all in the effort of executing on the $71 million backlogs to achieve profitability.
“Based on our current portfolio and run rate, we expect 2018 revenue to triple 2017 revenue and 2019 revenue to double 2018 revenue,” said Mr. Ault.
In line with the expansion drive, the company has reached an agreement with the owner of Prep Kitchen IAM Inc. for the addition of four new locations. The expansion plan is part of an effort that seeks to take advantage of the exploding San Diego market.
In addition to the expansion drive, DPW subsidiary Coulisys technologies has received two repeat customer contracts set to inject a whopping $1.03 million. One of the contracts is for the supply of a Power Plus value-added solution, with a leading dental firm.
Separately DPW is in the process soft spinning off its cryptocurrency-focused subsidiary Super Crypto Mining. The spinoff demonstrates the board of director’s strong conviction that the unit has what it takes to operate as an independent unit in the burgeoning cryptocurrency sector. In view of the spin-off, the company plans to declare a distribution of shares of common stock to DPW stockholders.
DPW has taken a significant hit in the market if a 90% plus drop is anything to go by. While charts indicate, the stock could continue dropping given the underlying steep downtrend, underlying fundamentals point a different picture.
The stock has come under pressure mostly on growing concerns about widening net loss. However, the company has shown it has what it takes to register robust revenue growth given the diversified business portfolio.
Revenue growth, as well as the signing of repeat contracts, are some of the development’s that could reinvigorate investor sentiments in the stock consequently triggering a bounce back.