Camber Energy (NYSE:CEI) is a diversified energy company providing custom energy and power solutions to commercial and industrial clients. They also own an interest in oil and natural gas assets in the U.S. CEI stock, however, is at best, a speculative penny stock, and at worst a pump and dump play.
Since the beginning of the year, CEI stock underperformed the oil and gas market since the beginning of the year, losing 0.44% to 90 cents per share. In the meantime, the crude oil market, measured by the United States Oil ETF (NYSEARCA:USO) surged 42.7% to $78.18 per share.
CEI stock tumbling during a spike in energy prices isn’t a great look. Camber has poor financials and an unclear vision for the future. Let’s dig into some details now.
CEI Stock Is a Speculative Play That Spikes Sporadically
CEI stock recently spiked to $2 per share at the beginning of March 2022. This was due to rising oil and gas supply concerns triggered by the invasion of Ukraine by Russian troops.
Since then, CEI share tumbled more than 50%, returning to the bearish trend it traded in the past few years. The company is now close to reaching its bottom of 50 cents per share, forming strong technical support.
The penny stock is prone to high risks and this stock looks more like a pump and dump asset rather than an investment. Scarce financial news, a small market capitalization, and limited liquidity make it an ideal instrument for speculators seeking quick profits. In this context and even if CEI stock might spike again in the future, investors should think twice before initiating a position on this energy stock.
CEI Stock Has Disappointing Financials
The company released second quarter 2021 results in November 2021, corresponding to business operations for the quarter ending Sept. 30, 2020. Over the quarter, revenues declined robustly, down 38.05% year-on-year to $57,458. This decline stemmed from oil and gas prices plunging due to weak demand during the start of the Covid-19 pandemic. On the other side, CEI’s bottom line also deteriorated significantly over the quarter. The company posted a massive net loss of $2.05 million. This followed a $1.05 million loss incurred from an unconsolidated entity and general and administrative expenses of $852,915.
CEI had a cash position of only $1.47m at the end of September 2020 and with its meager operating activity, the company is not sustainable in the long term.
Camber Lacks a Clear Vision to Onboard Investors
Camber Energy recently announced that Viking Energy Group, a majority-owned subsidiary, acquired a 51% interest in two companies that own intellectual property rights on a system designed to protect power distribution and transmission lines, during power breakdowns.
The management acknowledged that this solution is scalable and can be deployed cost-effectively deployed. Yet, and even if it might contribute to enhancing the fundamental picture of CEI, it will be insufficient to attract investors in the medium and long-term.
CEI Stock Is Overly Risky
For the moment CEI has marginal revenues and generated an enormous loss relative to operations, however, the stock trades at a high market capitalization of $304.87 million.
In this context, I am short on CEI, until the company re-centers on its activity and starts delivering consistent revenues that will have a material impact on its financials. Until then and even if retail interest for CEI stock rose recently, following lifting crude oil markets, only speculators seem to be actively behind Camber’s price action. This is not a virtuous sign for shareholders with a long-term investment stance.
On the date of publication, Cristian Docan 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.
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