The Russian invasion of Ukraine made cryptocurrencies pop. However, things seem to be quieting down once again. Bitcoin’s (BTC-USD) price continued to decline over the past week as Federal Reserve Chairman Powell mentioned the possibility of a more aggressive monetary policy. Analysts expect pressure on shares of a company such as SOS (NYSE:SOS), which has been impacted by speculation about crypto. Therefore, SOS stock is a risky play.
It is fair to say that SOS isn’t necessarily a pure-play crypto miner. However, it is the segment investors are most interested in. Investors who bet all their savings on SOS stock have seen shares drop largely, and it is hard to tell if there will be any chance of getting back the investments lost.
Shares shot down further when the company announced its price for a $20 million registered direct offering. The company is selling 35,750,000 American Depositary Shares (ADS) for 56 cents each under the terms of the offer. SOS Limited will use the proceeds from their offering to develop their business abroad and for general expenses.
For the last year, SOS has issued stock constantly to finance its operations. Investors have soured on this strategy, so in recent months, the stock price has fallen off a cliff.
SOS has been looking a bit underwhelming lately despite all of its potential. From a technical perspective, there’s not much to like about it. Many investors are worried about the recent Chinese crackdown on crypto mining and shifting the company away from it.
Is SOS Stock a Buy, Sell, or Hold?
One of the main issues many investors have with this stock is that strategic direction has not been provided by management — they have shifted forms and names over the years and updated their overall business model multiple times.
The company is now finding itself in the role of “crypto miner.” Back in 2020, when crypto made a huge comeback, the stock did well. However, now that things are back to normal and people are less eager to invest, the stock price has gone down significantly.
That is not to say that a course reversal is impossible. Despite how volatile the cryptocurrency market can be, investing in companies exposed to it has the potential for tremendous rewards. The only downside is that you’ll need to stay diligent to ensure that your investments are successful.
However, it is still unpredictable what will happen in the future. Overall, there is not much fundamental strength backing SOS at this moment. Therefore, SOS stock is not a buy.
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On the publication date, Faizan Farooque 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.
