Investing in penny stocks will always have its ups and downs. The amount of factors that impact a stock’s daily performance is almost endless, and this is no different for Moxian Inc.
Of course, while that statement is true for all stocks, penny stocks are, without a doubt, more at risk of sudden and volatile action. But that doesn’t mean investors aren’t still making big profits by betting on a smaller priced stock.
Tech Penny Stocks: Moxian Inc.
The tech sector, in particular, is full of ‘loss-making’ companies and on the radar today is Moxian Inc. (NASDAQ:MOXC). Trading down at the time of writing, at $0.48 USD per share, this China-based company is keeping analysts busy guessing.
According to SimplyWall St.:
“In the most recent twelve months, Moxian Inc’s earnings loss has accumulated to -$15.30M. Although some investors expected this, their belief in the path to profitability for Moxian may be wavering.”
It’s really not a surprise that a young tech company is losing money in its early days of business. The tech sector is one of the most expensive areas in which to start your business. High equipment and labor costs mixed with the continual need to keep up with competition on innovation means operational costs run high.
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Spending more money than a company is making is a problem faced by many tech penny stocks.
High Operations
But should investors be concerned with Moxian Inc.’s depleting figures? Analyst Bruce Howe’s calculation suggests they should:
“[Operational Costs] grew by 60.39% over the past year, which is considerably high. This means that, if Moxian continues to grow its opex at this rate, given how much money it currently has in the bank, it will actually need to raise capital again within the next couple of months!”
As he alludes to, the next logical step for any company not making capital from sales is to look for further investment. Offering up new shares is the easiest solution. If Moxian goes down this road, which is very probable, any new equity may dilute the value of the current stock. This is something investors will want to know.
It’s not a complete deal breaker, but considering how and when a company is going to raise cash again is crucial if you want to invest in any penny stocks currently making a loss.
Would you invest in penny stocks that are loss-making at present? Is this expected in the tech sector?
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