American Virtual Cloud Technologies (NASDAQ:AVCT) stock fell almost 40% in pre-market trading on Sept. 30 and was priced at just 18 cents per share. That put its market capitalization at just $22 million.
AVCT is a cloud communications company that offers proprietary cloud-based communications services.
In its latest iteration, AVCT divested its Computex services unit to focus on Kandy, a Unified Communications as a Service (UCaaS) company it acquired in 2020. Computex, which claims to provide “white glove” computer services, was the operating company when AVCT came public two years ago and was, and still is, a meme stock play.
What’s With Kandy?
Kandy was bought from Ribbon Communications (NASDAQ:RBBN) of Plano, Texas in 2020. AVCT said last December it was working with Etilisat, of the United Arab Emirates to deliver services to the Middle East using Kandy. In January, AVCT said Kandy might double its revenue in 2022. The company even said in February that the sale of CompuTex, and new capital, would bring in $15 million and clear its debts.
AVCT first announced the possibility of a reverse split in May, aimed at keeping the stock’s price over the $1/share needed to avoid delisting. In May it said the split might be 1:5, 1:10, or 1:15. It said on Sept. 29 it has chosen 1:15, which would bring the post-split price to about $2.70/share.
Executive changes and a strategic review gave AVCT stock a bump in late August. This brought the price to a high of 46 cents.
At the time there were rumors on Wallstreetbets of a short squeeze. For a time in September AVCT was among the most talked-about stocks on the Wallstreetbets subreddit. Fellow InvestorPlace contributor Chris MacDonald wrote about the chatter.
But the rally quickly fizzled. On Sept. 8 the stock was trading at 16 cents. A Wallstreetbets tracker called Apewisdom reported only one post about AVCT in the last 24 hours.
AVCT Stock: What Happens Next?
Our Louis Navellier is right. It would be foolish to speculate on AVCT stock given its recent history.
If Etilisat wants to buy the Kandy business, it can. But it won’t be paying a premium that will make AVCT shareholders who bought last month’s press release chatter whole.
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On the date of publication, Dana Blankenhorn held no positions in any companies mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
