With so much attention paid these days to penny stocks, I can understand why Ideanomics (NASDAQ:IDEX) might attract a certain kind of speculator. Further, with a “cheap” price tag (it will open today around $3.25) IDEX stock seems to fit the criteria of a solid opportunity. Still, as many of my colleagues warned: When shares are priced in subterranean territory, there’s usually a reason for it.
To be upfront about my analysis, I’ve been skeptical about Ideanomics and its trajectory in recent months. The last time I discussed IDEX stock, I mentioned that it was a poor long-term investment primarily because of the underlying company’s lack of focus.
For instance, Ideanomics has two core businesses involving electric vehicles and fintech. Both are relevant, but having them both under the same umbrella? That’s a different story.
Further, this is not an esoteric headwind. Several of my InvestorPlace colleagues have expressed concerns about wagering on an organization that apparently is spending as much effort finding itself as it is on its businesses. Plus, the price action of IDEX stock – especially over the trailing five years – reflects this identity struggle and not in a good way.
Not much has changed since my write-up (other than the IDEX stock price going down) so if you’re looking for a bullish perspective, this isn’t it.
That said, InvestorPlace contributor Will Ashworth stated that he’d consider IDEX priced at the low $3 territory as a solid opportunity for your speculation account. Generally, Ashworth cited various deals that are bringing cash toward Ideanomics, which it can then invest in its burgeoning EV business.
To be fair, Ashworth acknowledges that many things need to go right, but that if they do, we could be looking at a winner. What can I say? It’s possible.
Skepticism Creeping into the IDEX Stock Price
Still, banking on possibilities is a tough move. To be facetious, it’s possible that article-writing about stocks could become an Olympic sport. In that case, I’d put my name in to be on the U.S. Olympic writing team. But in all likelihood – thank God, I hear some of you say – it’s probably not going to happen.
I’m not suggesting that the probabilities of IDEX stock moving higher on positive fundamental developments is virtually out of the question. We’re still operating within the context of a pandemic-fueled equities market. Therefore, I’m not ruling out anything that’s related to Wall Street.
At the same time, I’ve got a strong feeling that my colleagues will retort that we’ve seen this before. While we’re talking about possibilities, it’s also possible that Ideanomics will pivot again to something else.
As Matt McCall wrote, “This is a company that’s constantly chased the ‘hot’ thing: streaming video, blockchain, electric vehicles, EV charging. Every time, it’s failed to deliver. Every time, shareholders paid the price.”
If I may dabble in technical analysis for a moment, it seems that people are getting skeptical about IDEX stock. With the caveat that my interpretation is correct, it seems that IDEX stock is charting a head-and-shoulders pattern. Mid-January and March 10 and 11 may be the two shoulders, with Feb. 8 representing the head.
If this turns out to be accurate, we could be looking at a correction soon. I’ll be interested to see what the technical heavies have to say but I don’t think IDEX stock lingering beneath its 50-day moving average is encouraging. Again, it just seems that skepticism is creeping into the Ideanomics narrative.
You Know What You Know
We’ve all heard the childhood retort, it takes one to know one. With all due respect, in this case, I don’t think Will Ashworth knows what he’s talking about.
That’s because Ashworth comes across as a guy who invests in the bluest of blue chips. Yeah, he may not be a market superstar at any given moment but what he does provide are ideas that deliver consistently robust returns.
I on the other hand know crap because I invest so much in it. Sometimes, the smelly stuff buys you a house. Other times, you just get more crap.
As the scatologist in the house, my diagnosis is that this stuff is putrid, like grade-A fecal matter (at least at this price point). If you lean conservative with your portfolio, you should stay away from IDEX stock and leave this to the experts.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.
