Investors on the hunt for the next small-cap play may find Bitauto (NYSE:BITA) intriguing. BITA stock has the potential to return massively, but, of course, there is a risk.
With a market cap of $699 million, Bitauto is a small-cap company that has had a rough year. But that won’t stop it.
Bitauto is an internet content and marketing services provider for China’s automotive industry. It generates revenue from several streams:
– advertising on its website and cloud platform
– subscription services
– transaction services between customers and auto dealers through its subsidiary Yixin
– digital marketing solutions for auto companies
BITA Stock in 2019
Highly dependent on the automotive industry, 2019 has not been favorable for BITA stock. Already this year, shares have lost over 50% of their value. Currently, shares are trading hands for $9.97 USD, up 2.57% on the day.
It’s likely that this depreciation is caused by poor car sales in China, the market-shattering trade war between China and the US, and the company’s own departure of its chief technology officer.
Also not helping matters is the stiff competition it faces in the form of its larger rival, Autohome (NYSE:ATHM).
But as The Motley Fool puts it, all is not lost, as for new investors “that sell-off reduced Bitauto’s forward P/E to 7, compared to Autohome’s forward P/E of 21”.
Bitauto is currently in a very attractive position for several potentials and one of those is as a takeover target for Autohome.
Also, with its BITA stock currently very cheap, the company’s valuation is very low relative to its growth potential:
“Revenue rose 31% to 10.58 billion RMB ($1.54 billion) in 2018. It expects its revenue to rise 14% to 16% annually during the first quarter, and analysts expect its revenue to rise 12% this year and 16% next year”.
“Bitauto’s non-GAAP net income rose 30% to 934.7 million RMB ($135.9 million), while its GAAP loss narrowed from 1.43 billion RMB ($207.5 million) to 679.3 million RMB ($98.8 million)”.
The climate that Bitauto is operating in is currently a difficult one. But that could all change if/when the trade war ends and China begins to buy cars again.
For under $10, the potential ahead is bright for BITA stock.
Featured Image: Deposit Photos/AntonMatyukha