Let’s face it: not everyone wants to invest in Chinese businesses nowadays. Yet, I’d like to invite you to consider Meten Holding Group (NASDAQ:METX), also known as Meten-EdtechX, as METX stock is quite affordable and has upside potential.
Of course, the stock could also decline sharply — that’s true of all stocks. Low-priced stocks, in particular, are susceptible to extreme bouts of volatility, so please be cautious.
Indeed, there’s one news item which might make prospective investors wonder whether METX stock will decline in the near term.
Still, this doesn’t mean you can’t put Meten on your watch list. After learning about the company — and its new venture into the blockchain — you might decide to give it a chance, even if you’re nervous about Chinese stocks in general.
A Closer Look at METX Stock
In March of 2020, Meten completed its merger with a special purpose acquisition company (SPAC) called EdtechX Holdings Acquisition. Immediately, METX stock shot up from around $10 to $17.
This was the same story we’ve heard with other SPAC stocks — and you might be able to guess how this story ends. Suffice it to say, it’s not a happy ending, at least so far. The stock collapsed back to $10 in May 2020, and then just kept dropping over the ensuing months.
September of that year was particularly painful, as that’s when METX stock fell below $5. This is a psychologically important level, as some folks will informally call any stock trading below $5 per share a penny stock.
Unfortunately, the situation only got worse from there. During the summer of 2021, the Meten share price dropped below $1, and as of early November 2021, METX stock was trading at around 62 cents.
Hence, it might be considered a bargain, if you like Meten’s business model — so, let’s explore it now.
No Need to Generalize
In 2021, Beijing has been cracking down on many Chinese businesses, including ones in the technology and education sectors. It even escalated to the point where, in July, Jim Cramer of Mad Money fame warned investors about Chinese stocks, saying, “you should steer clear of them at all cost.”
No disrespect to Cramer, but I’d like to avoid making generalizations about Chinese stocks. Granted, METX stock did go down in price after Cramer issued that warning. Nevertheless, Meten is a company worth considering. It provides English language training in China to adults and minors, through a digital platform as well as a nationwide network of learning centers.
The company is probably unknown to most American stock traders, but it has a strong presence in China with 1.6 million registered online users. Plus, Meten is demonstrating revenue growth.
Specifically, the company generated 204.8 million RMB in revenues during 2021’s second quarter (the most recently reported period), representing a 8.2% year-over-year improvement.
Big Pivot into the Blockchain
Today’s businesses, whether in China or practically anywhere else, can benefit from blockchain technology adoption. At least, that seems to be the thesis underlying Meten’s recent declaration that the company will pursue a new business initiative with a focus on cryptocurrency and the blockchain.
Apparently, this has been a while in the making, as Meten “has been exploring the feasibility of blockchain and cryptocurrency business beginning from 2020.”
Previously, Meten had applied non-fungible token (NFT) technology for digital-copyright purposes in online education. Comparatively speaking, though, that was just Meten getting its feet wet.
Now, the company is jumping head-first into the blockchain pool. Reportedly, Meten is “contemplating purchasing mining machines and NFT assets and placing them into operation in the U.S. or Canada.” So, this is poised to expand into a multi-national venture.
On top of all that, Meten is evidently “also considering building its own mining farm and is currently searching for low-cost natural gas, oil mines and other suitable sites in Canada.”
The Bottom Line
Clearly, Meten is serious about venturing into the blockchain, mining and NFT markets. Besides, the company already has a well-established language-learning platform with demonstrated revenue growth. If you’re still hesitant because METX stock has lost much of its value, that’s understandable.
Moreover, some investors will still balk at the idea of owning a piece of a Chinese company now. All in all, some people will see the value proposition of Meten, and others won’t. If you like what you’ve heard so far, though, then feel free to purchase a few shares of METX stock.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.