For all you know, they might be watching you right now. It’s true: the droids are out there and the cameras are on, as California-based autonomous robot security (ASR) company Knightscope (NASDAQ:KSCP) is on a mission to deter, detect, report and save lives. It’s an investable company, as the initial public offering (IPO) of KSCP stock took place just recently.
While the stock is new to the Nasdaq exchange, Knightscope has actually been around for a while. It was founded in 2013 by William Li and Stacy Stephens, and Knightscope already has 80 to 90 ASRs under contract in the U.S.
Suffice it to say that KSCP has the typical IPO pop, as well as the all-too-common post-IPO drop. So, should risk-tolerant investors consider the stock now that the hype and disappointment phases have passed?
It depends on whether you’re willing to take a chance on a business that doesn’t yet have a profitable profile. Knightscope shares represent a pure play on the emerging ASR market, and while the company’s financials aren’t necessarily ideal, the broader market’s growth could eventually lift the share price.
A Closer Look at KSCP Stock
On Jan. 27, KSCP stock opened for trading on the Nasdaq at $14.44. The share price soon fell to $6, but then it soared during the next few days, peaking at $27.50 on Jan. 31.
If you’ve been watching IPO stocks over the past couple of years, you can probably figure out what happened next. When you see enough hype-and-flop stories unfold, IPOs can become all too predictable.
After topping out in late January, KSCP stock starting working its way back toward a more realistic price point. The stock fell below $10 on Feb. 3, and landed near $9 the next day.
Knightscope doesn’t pay a dividend, so the company’s investors will have to rely on stock-price appreciation in order to turn a profit. Still, if you’re ready to wager on the robot revolution with a small company that has big ambitions, Knightscope should be on your watch list.
The Robots Are Everywhere
Before we get to the unfortunate financial aspects of Knightscope, let’s learn more about the company and what makes it so promising.
Knightscope’s ASRs are able to independently go on security patrols, without the need for a pilot. While offering a physical presence that might deter criminal activity, the ASRs can also provide real-time data that may be useful to security teams.
Currently, Knightscope’s product lineup includes the K1 Stationary, K3 Indoor and K5 Outdoor model robots. Additionally, there’s a K7 Multi-Terrain concept robot in the works.
It’s not uncommon to see Knightscope’s ASRs patrolling parking lots, shopping malls, hospitals and business campuses. Plus, the company just announced that it has another new casino client.
Moreover, Knightscope recently added a Fortune 500 company to its roster of clients. The company, Securitas, is among the largest security players in the U.S., and it has added a Knightscope ASR to its fleet.
Clearly, Knightscope is capable of securing clients. It’s also fair to say that the company is able to generate robust revenue.
In the six months ended June 30, 2021, Knightscope reported $1,778,095 in revenue. That’s pretty good for a small business, and it represents a slight improvement over the $1,637,548 generated during the equivalent year-earlier period.
The company’s bottom line doesn’t look as good as its top line, however. Discouragingly, Knightscope incurred an $11,050,034 net earnings loss in the six months ended June 30, 2021. That’s much worse than the $3,475,685 loss recorded during the equivalent six months of 2020.
Should You Buy the Stock?
It might require some cost cutting, and/or a bump in revenues. Somehow, Knightscope is going to have to swing from an earnings loss to profitability — and the sooner, the better.
On the other hand, it’s evident that Knightscope knows how to attract clients. Hopefully, the company can become profitable at some point as Knightscope increases its visibility and its customer base.
Until then, please understand that KSCP stock is highly speculative. Still, if you’re on board with the robot-security-camera revolution, this could be a worthy ground-floor opportunity.
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.