MyDx Inc (OTCMKTS:MYDX) has been checking to the downside in a sharp and punishing corrective swing. And the question we have in front of us is this: Is this an opportunity in something that is unjustifiably getting beaten down?
We’ve witnessed a dive of -30% during the past week in the stock. However, MYDX has a history of dramatic rallies so you may want to keep an eye on this one. Furthermore, the stock has seen interest climb, with an increase in recent trading volume of exceeding 190% beyond what we have been seeing over the larger time frame.
MyDx Inc (OTCMKTS:MYDX) trumpets itself as a company that MyDx, Inc., a science and technology company, develops and commercializes technology and devices to accurately measure chemicals of interest in solid, liquid, or gas samples.
It focuses on enabling people to live a healthier life by revealing the chemicals in what they eat, drink, and inhale. The company offers MyDx, a portable chemical sensor that fits in the palm of user’s hands; and MyDx App, which provides the user with additional information to understand the chemicals found by the MyDx Analyzer.
It also develops four sensors, which include CannaDx, a cannabis analyzer; organaDx to analyze food; AquaDx to analyze water; and AeroDx to test air. The company distributes its products through various channels, including distributors, e-commerce through company’s Website, direct to retail, and sales through affiliate partners.
MyDx, Inc. was founded in 2013 and is based in San Diego, California.
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The last time we looked at this stock, it was in a buying frenzy ahead of the November 8 vote. However, in the aftermath, we have seen a major reversal, but the selling may not be entirely justified.
The company just released Q3 results. For the three months ended September 30, 2016 and 2015, the Company had net revenues of $134,240 and $219,180, respectively. The comparable decline in net revenues, year over year, reflects the revenues from CannaDx shipments in 2015 that were a cumulative buildup of nearly one year of pre-sales.
That’s critical to understand: the y/y top line decline is not a sign of decreasing business, it would appear, but a sign of how strong the pent-up presales were back in 2015. In effect, the prior number represented more than a quarter of business. But to casual observers, it looks like a failing product. That may be value creating going on.
In addition, tor the three months ended September 30, 2016 and 2015, gross profit as a percentage of net revenues held steady at a healthy 40.2% and 40.8%, respectively, further reinforcing this idea.
For the three months ended September 30, 2016, the Company incurred operating expenses in the amount of $1,976,382 compared to $1,447,564 for the three months ended September 30, 2015. In the quarter ended September 30, 2016, the increase in expenses were a direct result of new investments made to create and launch a new global licensing model, with an initial emphasis across the greater China region. The Company’s licensing deal is expected to generate a minimum of $2.5 million in Earnings over the next 5 years.
The company also just announced that its recently launched OrganaDx and AquaDx sensors “are continuing to capture the attention of major US television broadcast news stations. This is a direct reflection of both the recent national water crisis as well as the increasing concern amongst consumers that much of our food is being sold with excess amounts of potentially cancer-causing pesticides.”
They were recently featured on network television. Commenting on the recent nationwide food and water news coverage, Daniel Yazbeck, Chairman and CEO of MyDx said, “The people on our planet are undergoing a massive shift in consciousness with respect to the quality of what they eat, drink and inhale, and MyDx is right where we want to be – enabling newly conscious consumers to make informed choices with real time affordable testing.”
Currently trading at a market capitalization of $2.5M, MYDX has a decent store ($183.75k) of cash on the books, with total assets approaching $850K, which is balanced by an appreciable load ($736.06k) of total accumulated debt. This is hardly a great balance sheet, and the market has clearly fallen out of love with the play. But its read of recent results may be way off base. This is an interesting play to keep track of here. For continuing coverage on shares of $MYDX stock, as well as our other hot stock picks, sign up for our free newsletter today and get our next hot stock pick!