Ideanomics (NASDAQ:IDEX) looks like it could be a winner. Indeed, as far as currently hot stocks go, Ideanomics stock seems to check all the boxes. It’s a play on electric vehicles in China plus cryptocurrency and blockchain elsewhere.

But looks can be deceiving. And upon closer inspection, the IDEX story seems to fall apart in a hurry. The efforts in China so far are miniscule, and already clouded in controversy. Ideanomics has been talking up its crypto and blockchain capabilities for years, but has delivered essentially zero on that front.

Indeed, this is a company that, going to back to its initial incarnation, hasn’t delivered much of anything at all. It’s difficult to see how that is going to change.

Ideanomics Stock’s Origin Story

Ideanomics’ corporate history can be traced to a small company called China Broadband, which as the name suggests offered broadband access in China. Via an acquisition, that company then attempted to develop a pay-per-view video-on-demand service in the country. As part of that strategy, the company changed its corporate name to You On Demand (YOD) in 2011.

YOD never worked out. Its lone claim to fame probably came from one its executives: Shane McMahon, son of World Wrestling Entertainment (NYSE:WWE) founder Vince, who set out to make his own name in business via the company.

There’s no shame in YOD’s failure. The likes of Alibaba (NYSE:BABA) and iQiyi (NASDAQ:IQ) left little room for a smaller streaming entrant, even one with a different model. What’s happened since then, however, seems more questionable.

The Post-YOD History

In 2017, the company changed its name to Seven Stars Cloud Group, and updated its mission. The new mission? “Aiming to become a next generation Artificial-Intelligent (AI) [sic] & Blockchain-Powered, Fintech company,” according to a regulatory filing. It acquired majority stakes in two businesses and then, via partnership, started trading crude oil and consumer electronics. (Stay with me, it only gets better…)

The trading business wasn’t successful, either. In 2018, Ideanomics (the current name was adopted in August 2018) generated $3 million in gross profit. Selling, general, and administrative expenses totaled more than $22 million. The company pitched its operating losses as the price to pay for gaining experience with its fintech efforts.

Those efforts ostensibly got a boost as the company acquired property in Connecticut which was to become “Fintech Village.” Ideanomics set up a subsidiary known as Intelligenta which was to offer AI solutions to the financial industry. In 2019, it acquired the Delaware Board of Trade with the aim of creating a better exchange for over-the-counter securities.

Ideanomics apparently developed a consulting offering as well. In 2019, it booked $40.7 million in “digital business consulting services” revenue. Those revenues came in conjunction with two transactions in the first quarter of that year, in which Ideanomics received a cryptocurrency known as GTDollar Coins, or GTB.

The same year, Ideanomics expanded beyond fintech. It moved into “green energy” via its Mobile Energy Global (MEG) division. It made an investment in a Malaysian vehicle manufacturer. Two investments in e-tractor start-up Solectrac followed this year.

So here we are: Ideanomics as a play on both EVs and the blockchain. Right?

Where’s the Fintech?

As a whole, the various moves all sound like logical steps. But individually, questions hover over each and every decision the company has made.

Take the blockchain efforts. Ideanomics continues to talk up its capabilities, but it’s accomplished nothing. The crypto efforts turned out to be a bust. The price of GTB collapsed. Or, at least, Ideanomics said it did. The currency only traded on one exchange, and the Securities and Exchange Commission pointed out in a letter to Ideanomics that the exchange’s website was not functional.

Unsurprisingly, Ideanomics wound up writing off all of its GTB after disclosing in a 2019 SEC filing that “the Company owns 2,409 Bitcoin and 17,460 Ethereum.” CEO Alf Poor told a caller on last year’s second quarter conference call that the company had converted its GTB to Bitcoin. The company later walked that back, clarifying that it held “GTB denominated in Bitcoin & Ethereum,” which both contradicted the conference call discussion and made little logical sense.

Intelligenta appears to have no presence outside the Ideanomics website. DBOT has no apparent activity. According to SEC filings, the company paid $5.7 million for FinTalk in 2018 (from an affiliate of Ideanomics’ chairman) and wound the business down last year, for no apparent reason. Fintech Village is up for sale amid a political uproar and after zero movement.

There’s just no fintech business here. Save for unprofitable trading and a dodgy crypto, there’s no sign there ever was.

MEG and IDEX Stock

Now, some IDEX bulls would probably argue that the fintech efforts aren’t all that important. Ideanomics stock is being pitched as a play on electric vehicle growth, particularly in China. The MEG division is developing a platform for e-taxis which eventually should expand to other commercial vehicles like buses and trucks.

But there are worries here too. We can ignore the battle with a pair of short-sellers in June over whether MEG actually operates at the site Ideanomics claimed. Simply based on what Ideanomics has said, the business doesn’t look all that attractive.

For instance, MEG’s third quarter revenue of $10.1 million looks impressive; it set a record for the unit. But that revenue is actually the gross price paid for the vehicles then delivered to third parties. MEG’s gross profit, according to the 10-Q, was just $685,000.

Even the revenue number looks disappointing. In an October press release, MEG said it had delivered 626 units in the third quarter. Another 440 were invoiced and pending delivery. But in October and November combined, MEG delivered just 253 vehicles.

All told, Ideanomics says it has delivered 879 vehicles between July and November. But in a flurry of press releases between June 16 and June 30, the company cited orders totaling 902 vehicles to be delivered in early Q3. Where did those orders go — and why is the company struggling to generate more?

A Questionable Story

Wherever you look with Ideanomics, there’s simply not much “there” there. Every business has been unprofitable, and in fact far from breakeven. Yet Ideanomics keeps adding more new businesses that remain unsuccessful. This isn’t Alphabet (NASDAQ:GOOGL) chasing “Other Bets” businesses with the massive cash flow from search. Ideanomics hasn’t succeeded in any market, yet seemingly keeps finding new ones.

The $45 million acquisition of Timios Holdings a good example. Timios seems intriguing (and it is profitable), but it’s not clear how the title and settlement provider fits in with the relatively nonexistent fintech business. At the least, Timios can’t justify a market capitalization that now, on a fully diluted basis, sits over half a billion dollars. Neither can Solectrac, with an implied valuation of about $15 million.

In fact, nothing really seems to. With Ideanomics stock, investors are buying a story that doesn’t match reality. Either the reality has to change, or the stock price will.

On the date of publication, Vince Martin did not have (either directly or indirectly) any positions in the securities mentioned in this article. 

After spending time at a retail brokerage, Vince Martin has covered the financial industry for close to a decade for InvestorPlace.com and other outlets.