Ideanomics (NASDAQ:IDEX) stock has been hemorrhaging ever since the company announced it would no longer report monthly delivery numbers in its Mobile Energy Global (MEG) segment. Since that February 15 announcement, IDEX stock has slipped from around $4.50 to levels around $3.10.
In deciding to report those numbers quarterly instead of monthly, IDEX management must have been well aware of the risks. The company made a calculation that the long-term rewards in changing its reporting structure were worth the short-term hit.
But in reality, Wall Street has been souring on IDEX stock for more than a month. Ideanomics is firmly in penny stock territory now.
And that makes the company’s fourth-quarter and full-year earnings report even more important when they are released on March 31.
Here’s a closer look at how we got here with Ideanomics.
What Is Ideanomics?
That’s a fair question, considering the twisted road the company traveled to get to this point.
It started out as a small Chinese company called China Broadband. Then it tried to expand to offering pay-per-view video on demand services and changed its name to You on Demand. The company’s chairman was Shane McMahon, better known as an executive and on-camera performer with World Wrestling Entertainment (NYSE:WWE).
In 2017, company changed its identity yet again, this time to Seven Stars Cloud Group. That company’s mission was to become a next generation financial technology (fintech) company that leveraged artificial intelligence and blockchain technology.
A year later, the company changed identities again, switching to the Ideanomics name. In an announcement, the company said its moniker reflected “a new paradigm and model for solving problems, creating efficiencies, and more equitably distributing wealth and knowledge. Ideas create value. With ideas, there is a future. Ideanomics, we are digitizing tomorrow.”
But the focus on fintech didn’t last. Later that year, Ideanomics expanded into green energy by launching its MEG division and investing in a Malaysian vehicle manufacturer.
Ideanomics makes most of its money these days from that MEG division. And it’s actively expanding its footprint in green energy as well.
The company spent $35 million to buy 2,000 units of the ride-hailing vehicle BYD D1 from Meihao Chuxing, which is a joint venture between BYD (OTCMKTS:BYDDF) and Didi. The BYD D1 is the world’s first custom-built, fully electric care for ride-hailing.
IDEX also spent $50 million to buy Wireless Advanced Vehicle Electrification, or WAVE, a Utah-based company that makes wireless charging stations for electric vehicles.
Its most recent deal on March 9 was to spend $13.2 million for a 20% stake in Energica Motor Company, an Italian motorcycle company that makes fully-battery powered high-performance motorbikes.
IDEX Stock at a Glance
If you look at IDEX stock over the past year, you’d be more than impressed. Valued previously at less than 50 cents per share, Ideanomics stock is up more than 820% in the last 12 months. On a year-to-date basis, gains are 49%.
But that also considers a huge drop in IDEX stock since mid-February. Ideanomics gave back 40% of its gains in just over a month.
Ideanomics reported third-quarter earnings in November that showed revenues of $10.6 million, compared to $3.2 million in the same quarter a year ago. More than $10 million of that came from the MEG unit, which is its full-service sales-to-financing-to-charging model, called S2F2C, to ease the transfer for fleet operators to electric vehicles.
With the company deciding to no longer report MEG vehicle delivery numbers on a monthly basis, it’s no wonder investors focused on green energy are showing signs of doubt.
After all, investors want as much information about a company as possible. Monthly figures are naturally better than quarterly figures in their eyes.
Ideanomics says the shift is needed because Ideanomics is diversifying its revenue streams between the MEG segment and its fintech branch, called Ideanomics Capital. Here was CEO Alf Poor’s take:
“Our revenue streams are already more diverse than we saw in 2020. After careful consideration and review, we concluded that simply posting monthly MEG vehicles delivery numbers is no longer representative of the revenue base within the Ideanomics’ family and for this reason we have decided to discontinue issuing monthly delivery numbers.”
The Bottom Line
Ideanomics has a chance to reassure investors and show them that there’s a good reason to shift to a quarterly reporting system when it releases its Q4 and full-year 2020 numbers on March 31.
Ideally, Ideanomics will be able to show continued growth in the MEG segment. And it should clarify how it will begin turning its fintech unit into a profit center.
If it can accomplish those goals, IDEX stock could resume its upward trajectory.
Ideanomics has an “A” grade and a buy recommendation in my Portfolio Grader.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.